MNI BRIEF: RBA On Hold, Sees Inflation 'Subdued'

The Reserve Bank of Australia left its key policy settings unchanged Tuesday, confirming it will wait until the July meeting to discuss extensions to the duration of its yield targeting on the 3-year government bond or its overall bond buying scheme. In its policy statement accompanying the decision, the RBA said it will not be considering a change in its 0.1% target rate for the 3-year bond next month.

Policymakers pointed to a recovery stronger than expected, with GDP growth forecast at 4.75% for 2021 and 3.5% for 2022. However, inflation and wage pressures remain 'subdued', Inflation is expected to pick up, but only at a 'gradual and modest' pace, with the central scenario pointing to 'inflation in underlying terms is expected to be 1½ per cent in 2021 and 2 per cent in mid 2023 - although a short-term blip above 3% is expected in the current quarter.