Reserve Bank of Australia Governor in testimony to parliament

  • economy has bounced quicker than forecast
  • the labour market recovery has been most remarkable
  • recovery has been interrupted by outbreaks of the highly infectious delta strain of the coronavirus, especially in New South Wales
  • says at the board's meeting earlier this week we considered the case for delaying this tapering to $4 billion a week
  • GDP is likely to decline in the September quarter
  • says we are expecting a return to strong growth next year.
  • how large the decline will be depends on the duration of the lockdowns and whether there are further material outbreaks elsewhere in Australia in the weeks ahead
  • says any additional bond purchases would have their maximum effect at that time and only a very small effect right now when the extra support is needed most.
  • says board also recognised that fiscal policy is the more appropriate instrument for providing support
  • household consumption in areas that are locked down is typically around 15 per cent lower than it would be otherwise
  • some increase in the unemployment rate is also expected over the months ahead
  • says we will, however, keep the situation under review and are prepared to act in response to further bad news on the health front
  • says the board will not be increasing the cash rate until inflation is sustainably in the 2 to 3 per cent range
  • significant parts of the Australian economy are still on the positive trajectory that was in place before the recent outbreaks
  • says under the central scenario, the condition we have set for an increase in the cash rate is not expected to be met before 2024

Headlines via Reuters

Lowe with an upbeat outlook. The Q&A to follow will hopefully be a little more interesting