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Australia Central Bank Set to Hold as Virus Crisis Spirals

  • Longer and tighter Victoria lockdown may hit RBA’s forecasts
  • Deflation and a surging currency tighten monetary conditions
A woman walks along a deserted lane in the Queen Victoria Village precinct in Melbourne, Australia, on July 16.

A woman walks along a deserted lane in the Queen Victoria Village precinct in Melbourne, Australia, on July 16.

Photographer: Carla Gottgens/Bloomberg
Updated on

Australia’s central bank staff will be working around the clock to factor in the latest data from Victoria state’s spiraling Covid crisis into economic projections ahead of Tuesday’s policy meeting and Friday’s forecasts publication.

Reserve Bank Governor Philip Lowe is set to keep interest rates and the three-year yield target unchanged at 0.25%, most economists say, and reiterate a readiness to resume buying government bonds in the event conditions worsen. Yet, bank economists will be grappling with the fluid situation in Melbourne -- home to about 20% of Australians -- as they prepare the quarterly update.