The Reserve Bank of Australia monetary policy meeting is on Tuesday 7 September 2021, announcement due at 0430 GMT.

Earlier previews:

Almost half of Australia's population has been in lockdown for weeks/months now and there is no end date in sight. The good news of course is that more than half is not in lockdown, but 50% of the economy functioning is not a net positive. Government health policy in NSW and Victoria is now a race against the outbreak to get the population vaccinated. NSW has hit 75% of the eligible population with one dose and is set to achieve 80% two-dose by the last week of October. Victoria is behind, but not by too much - getting to the 80% 2-shot target will take until sometime in November (late most likely). Unlike earlier outbreaks the Australian economy is not on track for a sharp bounce-back this time, its going to take longer, with the associated ongoing costs to weigh on employment ahead.

The RBA has shown itself over the years that it takes an optimistic view of the economy. This has sometimes been misplaced. To take this view of the current situation and likely developments in the months ahead would be contrary to the goals of an institution that is supposed to be forward-looking (to the best of its ability, no one is perfect).

The Reserve Bank of New Zealand clearly showed the way to handle negative developments. From being hell-bent on a rate hike the Bank recognised that the new outbreak in NZ and the subsequent lockdown meant the situation had changed, and so did RBNZ intent (they did not hike as expected merely a day prior to their meeting). The RBA is well placed today to delay their taper plan, perhaps only for a month or two. A short delay is not an admission of defeat, its a logical and reasonable response to changed circumstances.

Please bookmark this post and rub my nose in it in the comments after the RBA announcement if I am wrong.

RBA Governor Lowe with his optimism mug. Nothing wrong with being optimistic, but he has a job of work to do today.

RBA Governor Lowe