RBA keeps cash rate target unchanged at 0.10% today. It’s reiterated that RBA “will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range”. And, it is “too early to conclude that it is sustainably within the target band”. Thus, “the Board is prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve.
RBA also decided to stop the asset purchase program after February 10. The issue of reinvestment of the proceeds of future bond maturities will be considered at the meeting in May.
As for the economy, RBA said Omicron “has not derailed” recovery. Central forecast if for GDP to grow around 4.25% over 2022 and 2% over 2.023. Unemployment rate is projected to fall below 4% later in the year, and to be around 3.75% at the end of 2023. Underlying inflation is is expected to increase further in coming quarters to around 3.25%, and decline to around 2.75% over 2023.
