RBA to end asset purchases in February

While the Omicron variant poses some downside risks, Australia’s labour market has all but recovered from the recent lockdowns and we think that the unemployment rate will fall faster than the Reserve Bank of Australia had anticipated. With underlying inflation set to surprise to the upside, too, we now expect the Bank to end its bond purchase program in February. However, we still think that the hurdle for rate hikes is higher as the Bank has signalled that wage growth will have to pick up in earnest.   – This will be the last Economics Weekly for 2021. The next Weekly will be sent on Friday 7th Jan. 2022 –