Westpac:
The Reserve Bank Board next meets on August 3.The dominant topic of discussion will be the implication for the Australian economic outlook of the extended lock down in Greater Sydney.
Given the sharp unexpected deterioration in the economy the Board should send a clear signal that it continues to be committed to supporting the Australian economy with an immediate increase of weekly bond purchases to $6 billion.
It should also announce a deferment of the taper from $5 billion to $4 billion that was planned for early September.
It should commit to maintaining the $6 billion purchase pace through to the November Board meeting in recognition of the economy’s sudden deterioration and the uncertainty around the recovery phase.
ING:
The Reserve Bank of Australia (RBA) will probably leave all aspects of their current stance unchanged despite a pickup in inflation in 2Q21. Market participants are still waiting to see whether the price spike in Australia pushes into wages. That said, the latest batch of Covid-19 induced lockdowns may encourage the RBA to take an even more dovish approach to previous guidance on asset purchases later this year.
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