Australia’s lockdown may force reversal of taper decision

29.07.2021 - Petr Mazaylo
Australia’s lockdown may force reversal of taper decision

Australia’s central bank is set to reverse its decision to cut its bond-buying program in its monthly meeting next week.  The reversal is triggered by the stricter COVID-19 restrictions in Sydney that hampered the country’s economic rebound.

Of the 44 economists surveyed by Reuters, only one predicted a 0.05% cut in the Reserve Bank of Australia’s policy rate, while the rest believed it will remain at 0.1%. The survey was conducted between July 22 and 28.

Meanwhile, 14 of the 25 economists expect a reversal of the central bank’s taper decision announced in July. This was owed to a surge in cases of the highly infectious COVID-19 Delta variant in Sydney, which extended its lockdown until the end of August.

The A$2 trillion ($1.5 trillion) economy is believed to record a contraction this quarter, its first since June 2020. It will be attributed to a potentially weaker labor market and low private consumption.

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