The Australian central bank has once again surprised the markets with its optimism.

Despite the strict lockdowns in several major Australian cities, in which even the military is deployed in Sydney, the Reserve Bank wants to reduce the stimulus of 237 billion Australian dollars (174.35 billion euros).

As the reason, she cited an expected very strong recovery once the restrictions due to Corona first fall.

“The Australian economy was in full swing before the current outbreaks, and it should still grow strongly for the next year.

So far, experience has been that if a virus outbreak is curtailed, an economy will recover very quickly, ”said Central Bank Governor Philip Lowe.

Australian dollar is gaining in value

Christoph Hein

Business correspondent for South Asia / Pacific based in Singapore.

  • Follow I follow

Christian Siedenbiedel

Editor in business.

  • Follow I follow

The value of the Australian dollar then increased significantly against the American dollar and is now quoted at just under 0.736 American cents.

For the next year, the central bankers on Tuesday raised their growth forecast for the fifth continent from previously 3.5 percent to 4 percent.

In return, the unemployment rate will drop from an expected 4.5 to 4.25 percent.

To the surprise of the markets, Lowe confirmed that it would cut its bond purchases from A $ 5 billion a week to A $ 4 billion a week from November on, although the Australian economy is likely to contract this quarter.

Some analysts had therefore even expected the amount to be increased to 6 billion dollars.

In July, the ECB buys bonds worth EUR 88 billion

Australia is thus taking a step that has already been discussed in Europe and the United States.

But the European Central Bank (ECB) in particular has recently made a different decision.

In July, as part of its PEPP crisis program, it even bought bonds worth EUR 88 billion - more than it has been since the summer of last year.

ECB President Christine Lagarde confirmed in June that bond purchases should also be “significantly higher” in the third quarter than at the beginning of the year.

Overall, the crisis program is expected to run until March next year, the volume of bond purchases should amount to 1.85 trillion euros.

In the monetary policy outlook of the July meeting of the ECB Council, Lagarde had also announced that it would keep its monetary policy expansionary longer than expected.

This step was controversial among the ECB Council members.

In the United States, Federal Reserve Chairman Jerome Powell announced last week that he wanted to wait until there was substantial improvement in the labor market before exiting the crisis course.

Nevertheless, the US Federal Reserve (Fed) is no longer buying as many bonds as it was at the height of the crisis.

“The Fed was in acute crisis mode until around mid-2020,” says Commerzbank economist Michael Schubert.

Between March and June 2020, she bought securities for an average of 560 billion dollars a month - currently it is still bonds for around 120 billion dollars a month.

"An end to the crisis mode would be signaled by the decision to restrict bond purchases," said Schubert: "We expect this decision at the Fed in the fourth quarter."

Canada is reducing bond purchases in several steps

On the other hand, the Canadian central bank in Ottawa has already reduced its bond purchases several times.

Most recently, the volume was reduced to two billion Canadian dollars per week.