The policy board of the Reserve Bank of Australia said the outbreak of the Delta variant has delayed the recovery and added to the uncertainty about the future.
According to the minutes of the meeting held in September, GDP was expected to decline materially in the September quarter and the unemployment rate was expected to rise, but the economy was expected to bounce back as vaccination rates increase and restrictions are eased.
The board discussed the implications of the outbreak of the Delta variant for the Bank's bond purchase program.
With the economy expected to return to its pre-Delta path by mid 2022, members assessed that, on balance, tapering remained appropriate.
At the September meeting, policymakers pressed ahead with tapering its asset purchases. The bank decided to purchase government securities at the rate of A$4 billion a week and to continue the purchases at this rate until at least mid February 2022.
The board repeated that it will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range.
The Board seems to be clearly set on a gradual program of winding back QE over the course of 2022 in line with other central banks, Bill Evans, an economist at Westpac, said.
No change in the purchase pace will occur until February when a further taper of A$2 billion or A$3 billion per week can be expected, the economist noted.