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Aus central bank warns of delay to economic recovery

IANS | September 07, 2021 07:00 PM

CANBERRA: Reserve Bank of Australia (RBA) Governor Philip Lowe on Tuesday said the severe Delta outbreak and subsequent prolonged Covid-19 lockdowns in the states of New South Wales (NSW) and Victoria would "delay, but not derail" the nation's economic recovery.

The RBA's monetary policy decision report, released on Tuesday, announced that its bond buying stimulus of A$4 billion ($3 billion) per week would no longer be tapered off this year, but would be extended until at least mid-February 2022, reports Xinhua news agency.

The move is an indication that the economic recovery from the outbreak is predicted to take longer than previously expected.

The lockdowns in Australia's two most populous states continued to plague the nation's economy and are costing an estimated A$2 billion per week.

Lowe said the restrictions of activity were inflicting uneven but widespread impacts across the Australian economy, and would likely result in declining growth in the coming months.

"GDP is expected to decline materially in the September quarter and the unemployment rate will move higher over coming months, " Lowe added.

The bank also reaffirmed that its 0.1 per cent cash rate would not rise until inflation was sustainably within the 2 per cent to 3 per cent target range, a scenario that likely will not be met before 2024.

"The economy will be growing again in the December quarter and is expected to be back around its pre-Delta path in the second half of next year, " said Lowe.

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