Australias central bank may reverse policy taper decision – economists – Reuters

Pedestrians walk past the main entrance to the Reserve Bank of Australia (RBA) head office in main Sydney, Australia, October 3, 2016. REUTERS/David GraySYDNEY, July 20 (Reuters) – Australias central bank will likely reverse its choice to taper its bond buying programme if Sydney remains in a coronavirus lockdown when the board satisfies on Aug. 3, economists at the nations leading banks said on Tuesday.Earlier this month, the Reserve Bank of Australia (RBA) announced it will cut its bond purchases from September to A$ 4 ($ 2.93 billion) a week from the present A$ 5 billion, mentioning better-than-expected economic results. find out more Since then, 3 of Australias 6 states have actually plunged into a lockdown with the most populous city Sydney, the powerhouse of the nations A$ 2 trillion economy, facing its harshest constraints because the pandemic started in 2020. find out more “The near term financial outlook has degraded given that the July Board meeting,” Commonwealth Bank of Australia economic expert Gareth Aird wrote in a note.” Giving the unexpected nature of occasions with regards to the spread of COVID‑19 and the lockdowns we now expect the RBA to reverse the decision to taper the bond buying program from mid‑September if higher Sydney and/or Victoria are still in lockdown at the time of the August Board meeting.” The conversation around taper reversal comes as a bulk of experts are predicting Australias economy will shrink in the third quarter, its first contraction given that June 2020. find out more ANZ Banking Group economist David Plank stated minutes of the RBAs July meeting released on Tuesday emphasised on the flexibility around its bond purchasing programme, a signal the Board will review its taper choice in August. read more NABs Tapas Strickland stated the August meeting was “live” on taper reversal or a delay while Westpac primary economic expert Bill Evans stated a proper response from the RBA Board would be to momentarily raise bond purchases to A$ 6 billion over the September to November period.Such a relocation would help recognise the “flexibility” of the RBAs stimulus program and support the ongoing financial healing, Evans said.($ 1 = 1.3631 Australian dollars) Reporting by Swati Pandey;
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