Westpac says the RBA might increase its QE bond-buying, not taper
Westpac note in response to the deteriorating economic position in Australia due to ongoing and expanding lockdowns.
- Our revised estimates point to a likely contraction in the national economy of 0.7% in the September quarter, at a cost of around $8 billion. However, with a strong bounce back expected in the December quarter
On implications for the RBA:
- we believe a better approach would be to announce in August that the Board will instead review the taper decision at the September meeting
- ... Markets would be alerted to the possibility that a decision could be made to actually lift purchases from the week of September 10 to $6 billion per week with a review in November.
- ... If our forecasts prove to be correct a September decision to lift purchases on a temporary basis would be entirely reasonable.
When this is all over I hope someone buys this guy a beer or three