Tapering To Start, Guaranteed Life Of A$4bn/Week Run Rate Lengthened

The RBA decided to push on with its tapering decision, although the increased economic uncertainty that COVID has introduced means that the Bank will extend it's A$4/bn weekly bond purchase rate through until at least Feb '22 (it was previously scheduled to implement that purchase rate until at least mid-November).

• In terms of economic dynamics, the Bank suggested that "this setback to the economic expansion is expected to be only temporary. The Delta outbreak is expected to delay, but not derail, the recovery. As vaccination rates increase further and restrictions are eased, the economy should bounce back. There is, however, uncertainty about the timing and pace of this bounce-back and it is likely to be slower than that earlier in the year."
• It reiterated its forward guidance, noting that "the Board is committed to maintaining highly supportive monetary conditions to achieve a return to full employment in Australia and inflation consistent with the target. It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. The central scenario for the economy is that this condition will not be met before 2024. Meeting this condition will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently."