Minutes of RBA’s March 2 meeting reiterated that Australia economic recovery was “well under way” and had been “stronger than expected previously”. An important near-term issue was household and business adjustment to the tapering of some fiscal support measures. “Members noted that there may be a temporary pause in the pace of improvement in the labour market, as many firms had already adjusted the size of their workforces.”
Wage and price pressures had been subdued and were “expected to remain so for several years”. The Board will “look through” the “transitory fluctuations in inflation” due to changes in balance of supply and demand during the pandemic. Underlying inflation was expected to remain below 2% target over both 2021 and 2022.
Also, members affirmed that cash rate will be maintained at 0.10% for “as long as necessary”. Negative rate was viewed as “extraordinarily unlikely”. Conditions for a rate hike are not expected to be met “until 2024 at the earliest.
