Reserve Bank of Australia Governor Lowe statement full text is here:

That headline is a hoot - the 10bps April 2024 yield target has been discontinued. Like they had a choice.

Note - Governor Lowe will give a news conference at 4pm Sydney time, which is 0500 GMT.

Some of the points made today by the statement:

  • to maintain the cash rate target at 10 basis points and the interest rate on Exchange Settlement balances at zero per cent
  • continue to purchase government securities at the rate of $4 billion a week until at least mid February 2022
  • discontinue the target of 10 basis points for the April 2024 Australian Government bond

Australian economy is recovering after the interruption caused by the Delta outbreak.

  • As vaccination rates increase even further and restrictions are eased, the economy is expected to bounce back relatively quickly.
  • The central forecast is for GDP growth of 3 per cent over 2021 and 5½ per cent and 2½ per cent over the following two years.

One important source of uncertainty continues to be the possibility of a further setback on the health front.

The Delta outbreak caused hours worked in Australia to fall sharply, but a bounce-back is now underway.

  • many firms are now hiring, which will boost employment over coming months
  • central forecast is for the unemployment rate to trend lower over the next couple of years, reaching 4¼ per cent at the end of 2022 and 4 per cent at the end of 2023.

Inflation has picked up, but in underlying terms is still low, at 2.1 per cent. The headline CPI inflation rate is 3 per cent and is being affected by higher petrol prices, higher prices for newly constructed homes and the disruptions in global supply chains. A further, but only gradual, pick-up in underlying inflation is expected. The central forecast is for underlying inflation of around 2¼ per cent over 2021 and 2022 and 2½ per cent over 2023.

Wages growth is expected to pick up gradually as the labour market tightens, with the Wage Price Index forecast to increase by 2½ per cent over 2022 and 3 per cent over 2023.

disruptions to global supply chains