SYDNEY- Australia’s central bank would be prepared to take policy action should coronavirus lockdowns across the country threaten a deeper economic setback, minutes from its August meeting showed on Tuesday.
That outcome now looks ever more likely as the Delta variant spreads, piling pressure on the Reserve Bank of Australia (RBA) to delay a planned tapering of its bond buying program, or even to ease.
The chance of fresh stimulus saw the local dollar slip a quarter of a cent to $0.7308 while 10-year bond yields dropped to near seven-month lows at 1.16 percent.
The RBA Board had been optimistic at its Aug. 3 meeting that the economy would recover quickly once coronavirus lockdowns relaxed. As a result, it decided to stick with plans to trim its weekly bond buying to A$4 billion ($2.94 billion), from the current A$5 billion pace.
Yet minutes showed it would also continue to review the bond buying plan as the health situation developed.
“The Board would be prepared to act in response to further bad news on the health front should that lead to a more significant setback for the economic recovery,” the minutes showed.
Since then, the news has been consistently bad as lockdowns spread from Sydney to the capital of Canberra, and a further 2,500 kilometers to the Northern Territory.
