Policymakers of the Reserve Bank of Australia said the economic activity and employment were expected to decline in the September quarter as the high transmissibility of the Delta variant raised the possibility of a more gradual reopening.
The board said outbreaks of the Delta variant and accompanying lockdowns had introduced a high degree of uncertainty to the outlook for the second half of 2021.
Nonetheless, members expect the economy to rebound from the current setback later in the year as restrictions are eased, consistent with the previously observed pattern in Australia and overseas.
The current virus outbreaks and lockdowns had interrupted the recovery and many households and businesses were facing difficult conditions, the minutes said. Members therefore considered the case for delaying the tapering of bond purchases to A$4 billion a week currently scheduled for September 2021.
“The Board would be prepared to act in response to further bad news on the health front should that lead to a more significant setback for the economic recovery,” the minutes said.
The board repeated that it will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range. The central scenario for the economy is that this condition will not be met before 2024, the board observed.