In the minutes of their September board meeting, central bank members agreed that the substantial increase in pandemic support by the Australian government and state and territory governments would be one of the factors supporting the recovery into 2022.
“This support was more targeted than earlier in the pandemic, but for many individuals, the COVID-19 disaster relief payments were offering the same level of income support as the earlier JobKeeper payments,” the RBA said.
“This income support was expected to boost the household saving rate in the near term, and would eventually boost consumption when restrictions are eased later in the year. Business support grants, payroll tax deferrals and rental forbearance had also supported the cash flows of many businesses affected by lockdowns.”
More generally, members noted that business conditions across and within states remained uneven, with some industries experiencing very challenging conditions, while others, including professional services, appeared to have weathered the recent period reasonably well.
Beyond the September quarter, Reserve Bank members agreed that the timing and pace of the rebound in economic activity would depend largely on the lifting of restrictions in response to health outcomes.
“Vaccination rates had been increasing swiftly in the period leading up to the meeting, especially in New South Wales,” they said.
“As vaccination coverage increased, this would allow restrictions to be eased and recovery from the recent setback to begin in the December quarter. As restrictions were likely to be lifted gradually, the recovery could be slower than experienced earlier in the pandemic, when the end of community transmission of COVID-19 allowed for a more rapid lifting of restrictions.”