The Reserve Bank of Australia (RBA) will likely hold its cash rate at a historic low of 0.1% at its first policy meeting of the year on Feb. 2, a Reuters poll of 22 economists showed.
The central bank is also likely to announce an extension of its A$100 billion ($73.93 billion) quantitative easing programme, which is set to expire in April, the poll showed.
All but one of the 22 economists polled by Reuters expect the cash rate to be steady at 0.1% until end-2022. Pension fund Host Plus expects a cash rate cut to 0.05% at the February meeting.
Australia’s A$2 trillion ($1.53 trillion) economy likely contracted about 3% in 2020, which would be a much small decline than previous projections, as the country’s success in curbing the coronavirus pandemic allowed businesses to reopen and domestic travel to resume.
Policymakers still expect the recovery to be bumpy and uneven with the RBA reiterating it will not increase the cash rate until actual inflation is within its 2-3% target band.
Data out earlier this week showed annual growth in the trimmed mean measure of underlying inflation stayed at a record low of 1.2% in the December quarter, a green light for the RBA to keep policy super accommodative.
“We expect to see more upbeat communication from the RBA next week, in terms of global growth, local growth and the labour market,” Nomura analyst Andrew Ticehurst said.
“We also think it too soon to see any real change in RBA policy or guidance,” Ticehurst added. “We do expect a QE extension in April.”
RBA Governor Philip Lowe is set to deliver a speech on Wednesday in Canberra, following the Tuesday meeting, and he would then appear before a parliamentary economics committee on Friday.