In the minutes of December 21 meeting, RBA reiterated that decision about the bond purchases program will be made in February. The criteria to consider include “progress towards the Board’s goals for employment and inflation, the actions of other central banks and the functioning of the Australian bond market.” Information include December CPI, December and January labor market data, and overall impact of Omicron.
Three possible options were also discussed.
- The first option was to reduce the pace of purchases from mid February with an expectation of a likely end point in May 2022. This option is consistent with November forecasts for employment and inflation.
- The second option was to reduce the pace of purchases and review it again in May 2022. This option is stronger if progress was slower than expected.
- The third option was to cease purchases altogether in mid February. In case of better-than-expected progress, the third option would become more appropriate.
Regarding interest rate, “the Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range.” And, “this is likely to take some time and the Board is prepared to be patient.”
