The RBA left all monetary policy measures unchanged in May and reiterated that a rate hike would “unlikely to be until 2024 at the earliest”. However, the central bank upgraded economic projections and signaled that some amendments would be made on yield curve control (YCC) and QE in July.

The RBA acknowledged the strong economic developments since the last meeting. As noted in the accompanying statement, “recovery in Australia has been stronger than expected and is forecast to continue”. The staff also upgraded economic projections. GDP growth is projected to improved to +4.75% y/y this year (previous: +3.5%) and then to +3.5% over 2022 (unchanged). The unemployment rate will likely drop to 5% by end-2021 (previous: 6%) and then to 4.5% by end-2022 (previous: 5.5%).