Australia’s Central Bank Holds as East Coast Reopening Looms

Australia’s central bank kept its monetary settings unchanged, betting there’s enough stimulus to foster an economic recovery ahead of a gradual reopening of Sydney and Melbourne as vaccination rates climb, Bloomberg News reported. Reserve Bank Governor Philip Lowe kept the cash rate at 0.1% -- as expected -- at Tuesday’s meeting. Lowe cut weekly bond purchases to A$4 billion ($2.9 billion) last month, while pushing out their next review to mid-February to help cushion the economic impact of lockdowns along the nation’s east coast. “This setback to the economic expansion in Australia is expected to be only temporary,” Lowe said in a statement. “As vaccination rates increase further and restrictions are eased, the economy is expected to bounce back.” Lowe maintained his upbeat outlook for the economy as Sydney prepares to ease restrictions following a 15-week lockdown to contain an outbreak of the delta variant. New South Wales’ state vaccination rate is closing in on 70%, the first condition for easing, with further reopening at 80%. The governor said the uncertainty lies in the pace and timing of the bounce-back. Financial regulators are grappling with how to contain surging credit and a red-hot property market without choking off the economy’s recovery. The RBA has said consistently it doesn’t expect to raise rates until 2024 at the earliest -- leaving tighter lending rules as the only way to rein in the property market. Read more.
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