Investors of the Asian session today witnessed the testimony of the Governor of the Central Bank of Australia (RBA), Philip Lowe before the Standing Committee on Economics of the House of Representatives.
In his latest statement, Lowe said that RBA policymakers are actually considering postponing a reduction in its bond purchases next month following the current Covid-19 situation in Australia.
However, with the expectation that the effects of the new wave of coronaviruses will be temporary, the RBA surprised the market by defending its decision to further reduce its bond purchases.
Among the main reasons central banks took the decision was because they expected stronger growth next year, according to Governor Lowe.
He added that any additional bond purchase would have maximum impact at that time and only a very small impact now when additional support is desperately needed.
Even so, policymakers recognize that fiscal stimulus is a more appropriate instrument to provide support. Following that, Lowe said the RBA is ready to act if the economic outlook deteriorates.
Meanwhile, the market was also marked by the RBA's monetary policy statement issued during the Asian session, where the central bank forecast 4% growth this year, followed by an increase of 4.25% in 2022, and 2.5% in 2023.
Meanwhile, the unemployment rate is seen to decline to 4.25% next year, and 4% by the end of 2023 from the 5% level forecast this year.
Although Governor Lowe's statement was seen as more optimistic, the Aussie dollar failed to rise due to poor developments on the Delta coronavirus outbreak in Sydney and New South Wales which continued to record higher, as well as the strengthening USD.
