Tapering QE, ending in May is consistent with forecasts: RBA

Bloomberg

The Reserve Bank of Australia (RBA) said tapering its bond buying program at the first meeting of 2022 and ending it in May is consistent with existing forecasts, as policy makers presented an upbeat view of the economy.
The RBA’s board discussed two other options for quantitative easing: it could cease purchases in February if better-than-expected progress was made toward its employment and inflation goals, according to minutes of the meeting. The third option was to taper in February and review again in May if progress was slower.
“These options reflected the expectation that the economy would continue to bounce back,” the minutes said. “The emergence of the omicron variant was a new source of uncertainty, but it was not expected to derail the recovery.”
The RBA’s debate comes against the backdrop of global counterparts accelerating their winding back of stimulus to counter mounting inflation pressures. The RBA’s final decision will be announced on February 1, giving policy makers time to assess the economy, with readings on inflation, the labour market and retail sales due in coming weeks.
The bank also said that risks to the recovery from the omicron variant would also be clearer by February.
The board met before jobs data that showed record hiring in November and unemployment rate tumbling to 4.6%.
Earlier this month, Governor Philip Lowe said any decision to end QE is separate from the timing of the first interest-rate hike, adding the moves of other central banks will also have an impact on what the RBA does with QE. The central bank reiterated that rates will not be raised from the current record low of 0.1% until actual inflation, not forecast, is sustainably within the central bank’s 2-3% target band.