The Reserve Bank’s latest statement on monetary policy said it expects a rapid economic recovery and has lifted its GDP forecast to 3 per cent over 2021, then 5.5 per cent for 2022, before returning to around 2.5 per cent in 2023.
It said growth is expected to have contracted by around 2.5 per cent in the September quarter. The unemployment rate is anticipated to be a little below 5 per cent by the end of 2021 before declining to 4 per cent by the end of 2023.
The RBA’s underlying inflation outlook suggests a gradual pick up over the next couple of years as the economy recovers and spare capacity is absorbed. Trimmed mean inflation is forecast to be 2.25 per cent at the end of 2022 and around 2.5 per cent by the end of 2023.
The bank said the board’s central scenario is the first cash rate increase to occur in 2024, though it said a move in 2023 could be warranted if conditions changed. The RBA said the board dismissed raising interest rates in 2022 based on the latest data and forecasts.