MNI RBA Preview - August 2021: Walking Back Tapering

Executive Summary

• The well-documented COVID-driven lockdown in place in Sydney, which most now expect to last through at least the bulk of September, is set to result in the RBA reneging on its previously outlined tapering move before it goes into play. As a reminder, the Bank only outlined its tapering plans (to move to A$4bn/week of bond purchases from the current A$5bn/week in early to mid-September) at the end of its July meeting.
• The aforementioned round of social mobility restrictions deployed in Sydney, in addition to shorter run limitations across several other state capitals in recent weeks, will result in a markdown for the Bank's immediate economic growth expectations (although '22 economic growth expectations will likely be marked higher), while unemployment expectations are less likely to see meaningfully adverse revisions. A reminder that June saw the headline unemployment rate dip below the Bank's end of '21 forecast (5.0%), as it hit 4.9%.
• RBA Governor Lowe will get a chance to refine the Bank's message when he testifies in front of the House of Representatives Standing Committee on Economics on Friday (09:00 Sydney/00:00 London).
• Click to view the full preview.