RBA monetary policy meeting Tuesday 03 August 2021 - preview
The Reserve Bank of Australia announcement and Governot Lowe's statement are due at 0730 GMT.
- The RBA's 'Recovery to Expansion' narrative no longer holds given the prolonged Sydney lockdown. GDP and unemployment rate downgrades in the August SoMP will lend a dovish tone. We expect the Bank to reverse their September taper with QE staying unchanged at A$5 B from Sep'21.
- We shift our call on the stock under Flexible QE from 'up to A$100 B' to A$130 B.
(ps. SoMP is the Reserve Bank of Australia's Statement on Montary Policy which is due on Friday this week - August 6 at 0130 GMT. I'll have more to come on this as we approach Friday)
- We expect that the policymakers will announce to postpone the tapering until the recovery of the economy from the current outbreak is confirmed.
- The RBA will also revise its GDP forecasts to reflect the impacts from the current outbreak: cutting the growth in 2021 and raising the growth in 2022. A good deal of uncertainties in both the economy and monetary policy due to COVID-19 outbreak is likely to persist until 4Q21.