- July 12, 2021
- Posted by: Trading
- Category: News
Recently, the Reserve Bank of Australia decided to leave interest rates unchanged at 0.10%, in line with analysts’ expectations. The RBA also announced its decision to restrict its bond purchase program.
RBA Governor Philip Lowe said that the country’s economic recovery is stronger than expected, which explains its decision to buy $4 billion in securities per week instead of $5 billion per week until mid-November. However, the bank insisted that taking into account the current situation, it is not planning a rate hike before 2024.
“The Board remains committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target,” commented Lowe. “It will not increase the cash rate until actual inflation is sustainably within the 2 to 3% target range.”
The bank is not planning to increase interest rates until inflation reaches its target of between 2 and 3 percent and remains at that level for some time. For this to happen, the labor market conditions should be tight enough to allow wages to grow substantially.
Unemployment levels currently stand at 5.1%, though analysts expect it to fall to 4.5% by the end of the year.
Lowe also commented about the rising real estate prices, which are being caused by an increase in demand from both first-home buyers and owners. This has caused an increase in housing credit and property prices.
Concerning this situation, the bank pledged to monitor the trends in housing borrowing and to make sure lenders behave responsibly.
Australia is now struggling with the spread of the delta variant of the coronavirus. Since the beginning of the pandemic, 30,829 COVID-19 cases have been reported in Australia, including 910 deaths. Australia’s vaccine rollout has been heavily criticized for being relatively slow, and it is estimated that it needs to double its pace to vaccinate 80% of the population before the end of the year.
So far, 8,402,191 COVID-19 vaccine doses have been distributed among the Australian population, while about 1.86 million individuals are fully vaccinated, which accounts for around 7% of the population.
Since the beginning of the week, the Australian dollar has gained 0.76% against the US dollar, recovering from the previous week’s 0.80% loss. By 10:26 GMT, the Aussie gained 0.70% against the greenback, hitting the 0.7581 level.