22:42
As expected the Reserve Bank of Australia has left its cash rate target at the record low 0.1% annual rate that it has sat at since November 2020 when the central bank slashed borrowing costs to aid the pandemic-hit economy.
The general comments remain upbeat about the revival of economic activity as lockdowns related to the Delta Covid strain end.
“Household consumption is rebounding strongly and the outlook for business investment has improved,” Philip Lowe, the RBA governor said in a statement. “The emergence of the Omicron strain is a new source of uncertainty, but it is not expected to derail the recovery. The economy is expected to return to its pre-Delta path in the first half of 2022.”
Commentators will note that the language remains one of patience in terms of lifting the interest rate should inflation gather pace. Lowe doesn’t expect that to happen soon.
“While inflation has picked up, it remains low in underlying terms. Inflation pressures are also less than they are in many other countries, not least because of the only modest wages growth in Australia,” he said. “The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range.”
The bank has put a 2024 time stamp on that, with a proviso of 2023 if there was an inflation surge. Markets, though, have predicted a mid-2022 starting point for official rates to start rising.
One other notable point. The RBA is sticking with plans to keep buying $4b worth of government debt each week until at least mid-February. There had been some expectation that it might stop sooner.
By them, the RBA will be the proud owner of $350b (yes, billion) in federal, state and territory debt. What happens to that in the future will be interesting.
Anyway, short of some unforeseen calamity, the RBA Board won’t meet again until February 1.
22:21
Nationals deputy says ‘conversations are happening’ about Olympics boycott
The deputy leader of the Nationals, David Littleproud, says “conversations are happening” within the Australian government about whether to follow the US in a diplomatic boycott of the Beijing Winter Olympics.
Littleproud, the agriculture minister, addressed reporters in Canberra today and left the impression that a decision was not about to be announced. He said the Australian government respected the Biden administration’s decision “but we will make our own” decision:
“That’ll be a decision for cabinet as we move forward and obviously National Security Committee will make those determinations, and I understand that those conversations are happening. But obviously I can’t make any comment beyond that and I’ll leave that obviously to the prime minister and the foreign minister.”
Asked about calls from within the government to follow suit, Littleproud said there would be “divergent views” but backbenchers were not privy to information before the cabinet and its national security committee.
“So it’s important that we let that decision process take place while our National Security Committee get to that determination, and I’m sure the prime minister will make a determination with that committee in due course.”
Earlier today the minister for sport, Richard Colbeck, reaffirmed the government’s holding line: “A decision on commonwealth representation at the Beijing Winter Olympics is yet to be made.”
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