The emergency of the omicron COVID-19 variant could prompt the central bank to delay scaling back or ending its extraordinary $350 billion bond buying program in February.
The omicron COVID-19 variant is making the economic outlook more uncertain and could prompt the Reserve Bank to delay scaling back or ending its $350 billion bond buying program in February., the RBA board noted at its December 7 board meeting.
The minutes canvassed three options previously outlined by governor Philip Lowe for the future of the RBA’s quantitative easing program, the future of which will be determined at the next board meeting on February 1.First, tapering the $4 billion weekly bond purchases and terminating the program in May; second, tapering the program but with a review in May; and third, terminating the program altogether from February.
JP Morgan economist Tom Kennedy said the three options were not exhaustive, and the bank “could go down a different path should conditions warrant,” noting the emergence of the new variant.Aside from omicron, the RBA indicated America’s “great resignation” – where quit rates were at record highs while the labour market was well below pre-pandemic levels – was not being replicated in Australia.
“The higher rates of voluntary job turnover in some sectors, especially in a tight labour market, could in time lead employers to offer higher wages to retain their workers,” the minutes said. Unions have been calling for caps to be lifted and for 3 per cent to be the floor for negotiations in 2022.
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