'Delta Variant Spread' May Delay Tapering Timing of Reserve Bank of Australia

Philip Lowe, Governor of the Reserve Bank of Australia
Photo by AP Yonhap News

[Asia Economy Reporter Park Byung-hee] Bloomberg News predicted on the 5th (local time) that the Reserve Bank of Australia (RBA) will reconsider its tapering (asset purchase reduction) plan due to the spread of the Delta variant.

The RBA will hold a monetary policy meeting on the 7th to decide on the benchmark interest rate and monetary policy operations.

In a Bloomberg survey of 16 economists, 10 expected the RBA to postpone its tapering plan.

At the August monetary policy meeting, the RBA announced a tapering plan to reduce weekly bond purchases from 5 billion Australian dollars to 4 billion dollars starting in September.

However, the recent sharp increase in Delta variant cases in Australia has heightened economic uncertainty. New South Wales and Victoria, which account for 55% of Australia's gross domestic product (GDP), have implemented strict lockdown measures and emphasized that they will not ease restrictions until the number of confirmed cases drops to near zero. As a result, a slowdown in future economic growth is inevitable, and therefore, the argument that the RBA should maintain stimulus measures longer is expected to gain traction.

The weak U.S. employment data released on the 3rd also provided room for the RBA to delay its tapering plan. Due to the weak U.S. employment figures, there are expectations that the U.S. central bank, the Federal Reserve (Fed), may postpone tapering.

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