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The Reserve Bank of Australia board is set to meet for the last time this year, but economists don’t expect it to change its policy package this time around.
Since the last monthly board meeting, it has been confirmed that the economy has contracted in the September quarter due to COVID-19 lockdowns in NSW, Victoria and ACT.
The 1.9% decline was smaller than expected, but still represented the third largest quarterly contraction on record.
But there are already signs of a strong recovery with job growth and a rebound in retail spending.
Treasurer Josh Frydenberg has said he will improve his growth forecast for next year when he delivers his mid-year budget review on December 16.
The Organization for Economic Co-operation and Development warned last week that the RBA needs to be vigilant for signs of rising inflation and may need to tighten monetary policy faster than it currently anticipates.
Many economists agree that the RBA may be able to raise the cash rate to its all-time low of 0.1% before 2024, a year the central bank still believes is possible.
AMP Capital chief economist Shane Oliver believes the cash rate may start to rise at the end of 2022.
“The main threat would be if Omicron turns out to be more lethal than Delta with vaccines offering little protection causing a return to long blockages … resulting in another year of stunted growth,” said Dr Oliver.
In addition to his statement after the board meeting on Tuesday, RBA Governor Philip Lowe will also deliver a speech on Thursday.
However, the audience – the Payments Summit 2021 – suggests that his speech could only briefly touch on monetary policy.
The economic figures due for release this week will provide an update on the behavior of the labor market after the widespread closures.
The ANZ will publish its monthly series of vacancies for November on Monday and the National Skills Commission will publish its preliminary report on qualified vacancies for the same month on Wednesday.
The Australian Bureau of Statistics will release its latest report on paid employment for the fortnight ending November 13, a data set which showed a strong recovery in October.
Meanwhile, Australian stocks will start the week under the shadow of another decline on Wall Street on Friday.
Uncertainties surrounding the Omicron variant continued to weigh heavily on investor sentiment.
While the payroll in the United States rose 210,000 less than expected in November, the unemployment rate fell to 4.2 percent, a level considered by some to be full employment.
The US S&P 500 lost 38.71 points, or 0.85%, to end at 4,538.39 points, the Dow Jones Industrial Average fell 64.78 points, or 0.19%, to 34,575.01 and the Nasdaq Composite lost 292.16 points, or 1.90%, to 15,089.16. .
Australia’s benchmark S & P / ASX200 closed on Friday up 16 points, or 0.22%, at 7,241.2 points.
Australian equity futures were mixed, with the next-expiring December contract rising 11 points to 7260, but the March position losing 52 points to 7105.
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