RBA delays bond purchase review until 2022

The board of Australia’s central bank will not review its bond-buying programme until at least February 2022, continuing to purchase A$4 billion ($3 billion) in bonds a week.

Governor Philip Lowe announced the extension of the Reserve Bank of Australia’s bond-buying programme today (September 7), alongside the decision to leave interest rates at 0.1%.

Originally, the board was set to review the pace of bond purchases in November. The decision to push back the review “reflects the delay in the economic recovery and the increased uncertainty associated with the Delta outbreak”, Lowe said.

The board also reaffirmed interest rates would not rise until full employment is reached and inflation is within the RBA’s target. “The central scenario for the economy is that this condition will not be met before 2024,” Lowe said.

Australia’s economy appeared to be rebounding before a swathe of new Covid-19 cases were reported in late August; GDP had increased by nearly 10% over the year.

Lockdowns across many of the eastern states have since been declared, however, and threaten to disrupt economic activity.

While Lowe said the new outbreak would only delay and not “derail” Australia’s recovery, there was uncertainty around how quickly the economy would “bounce back”.

The governor said he expected the recovery to be “slower than that earlier in the year” but economy was likely to be showing signs of growth again in December 2021.