RBA Keeps Monpol Settings Unchanged, Focus Entirely On Domestic Economy
- Published on
- 05 Oct 2021, 03:48 PM
By Sophia Rodrigues
(Sydney, October 5, 2021)—The Reserve Bank of Australia left its key monetary policy settings unchanged as expected and issued a bland statement that focused entirely on the domestic economy.
It indicates the RBA’s priority is to see how the economy performs once restrictions are eased and whether its central scenario that the economy would return to pre-Delta path around the second half of next year is likely to come to pass.
There was no mention of global economy for the fourth month in a row, though on this occasion the RBA referred to disruption to global supply chains and said the impact of this on overall inflation remains limited.
“While disruptions to global supply chains are affecting the prices of some goods, the impact of this on the overall rate of inflation remains limited,” the RBA said.
On the labor market the RBA said the restrictions on activity have had a significant effect with hours worked -- the best indicator of labor market conditions at the moment, declining by nearly 4% in August.
At the same time, the RBA appeared optimistic about the future, noting job vacancies showed many firms were seeking to hire workers ahead of the expected reopening in October and November.
Commentary on the housing market was on expected lines with the mention of discussion among Council of Financial Regulators on medium-terms risks to macroeconomic stability from rapid credit growth amid historically low interest rates.
The final paragraph on forward guidance was unchanged.