Australia: RBA stands pat in October
At its monetary policy meeting on 5 October, the Reserve Bank of Australia (RBA) decided to keep the cash rate unchanged at the all-time low of 0.10%. It also left the target for three-year government bond yields at around 0.10%, and stated it will continue purchasing government bonds at the rate of AUD 4 billion a week until at least mid-February next year in order to maintain accommodative financing conditions.
The decision was underpinned by the will to support the recovery, following a likely downturn in the third quarter due to the Delta outbreak and the associated reinstatement of containment measures. Moreover, the Bank judged that wage and price pressures were still subdued. The Bank expects growth to resume in the fourth quarter, although much depends on when restrictions are eased.
The Bank maintained a dovish stance in its communiqué, stating that it is “committed to maintaining highly supportive monetary conditions to achieve a return to full employment”. Moreover, it ruled out hiking the cash rate before inflation establishes itself within the 2.0%–3.0% target range sustainably, which it does not expect to happen before 2024. As such, all of our panelists see the cash rate remaining at 0.10% for the rest of this year.
The next monetary policy meeting is scheduled for 2 November.