RBA will delay any (even modest) withdrawal of political support – Goldman Sachs

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In its latest economic analysis of Australia and the RBA’s monetary policy outlook, Goldman Sachs (GS) expects GDP to “fall 2% in the third quarter compared to the previous period, due to ‘lower household consumption and construction activity.

“The economy is then expected to grow 1.8% in the fourth quarter, as restrictions are relaxed more gradually than in the past,” GS added.

Regarding RBA policy, the US bank said: “The downside risks to Australia’s macroeconomic outlook have increased significantly since early July, when the Reserve Bank of Australia announced the planned reduction in its program. quantitative easing. “

It should be noted that Goldman keeps his September view on the table with a 65% probability while also saying, “But we continue to see a strong argument for the RBA to delay any (however modest) withdrawal of political support. “.

GS further said: “The revisions have caused it to reduce its forecast for 2021 in terms of the annual average by half a percentage point to 4.2%. In turn, he increased his 2022 estimate by 0.4 percentage point to 4.2%. “

In general terms, GS said, “Based on the current pace, the share of adults with two doses will rise from the current 30% to the government’s 70% to 80% target by mid-November. While the improvement is encouraging, the experience of countries more advanced in vaccine deployment raises a number of potential issues on the horizon. “

Read: AUD / USD keeps recovery around 0.7200 against weaker USD


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