SME lending weekly update

This week, we saw a new Premier for NSW, a maintained monetary policy, and NSW as the first state to reach the 70% double vaccinated milestone, positioning some NSW restrictions to be eased from Monday October 11th.

RBA October Statement on Monetary Policy(1)

The Reserve Bank of Australia Governor, Phillip Lowe, released his October statement on monetary policy on Tuesday 5 October. The RBA Board decided to:

• Maintain the cash rate target at 10 basis points;

• Maintain the target of 10 basis points for the April 2024 Australian Government bond; and

• Continue to purchase government securities at the rate of $4 billion a week until at least mid-February 2022.

Lowe highlighted that underlying inflation is running at around 1.75% and wages are increasing at 1.7%. As has been consistent over the last year or so, Lowe made a point of stating that the Board will not consider increasing the cash rate until inflation is sustainably within the 2 to 3 percent target range and that this is not expected to occur before 2024, a view that is reflected by the maintained 10 basis point target of the April 2024 Australian Government bond.

Lowe nodded to the expected contraction of Gross Domestic Product in the September quarter, however, expressed his expectations of economic bounce-back post restrictions.

NSW State Premier(1)

Tuesday 5 October saw Dominic Perrottet sworn in as Premier of NSW. On the morning of Thursday 7 October, Perrottet announced lesser restrictions for NSW at the 70% and 80% double vaccinated milestones than what was previously advised under Gladys Berejiklian’s leadership. We believe the primary change in restrictions for SMEs is that masks will no longer be required in office buildings from the 80% milestone, where it was previously scheduled for 1 December. This should see increased movement as workers leave their home desks and return to the office and bring forward the expected increase in discretionary spending many small businesses have been waiting for.

Lockdown Durations(2,3,4,5)

NSW, VIC and ACT remain on track to meet their respective lockdown end dates as outlined below. Lockdown across NSW ends next Monday, with the new Premier announcing amendments to the current roadmap, specifically allowing more people to gather in homes, mask mandates in the office being removed when 80% of the adult population is fully vaccinated and schools returning from October 25th. Despite some cases arising, QLD has avoided any form of hard lockdown at this stage.

1 Reserve Bank of Australia – October Monetary Policy Decision

(VIEW LINK)

2 QLD Government

Novel coronavirus (COVID-19) | Queensland Government (covid19.qld.gov.au)

3 NSW Government

Roadmap for easing COVID-19 restrictions | NSW Government

4 VIC Government

Victoria’s Roadmap | Coronavirus Victoria

5 ACT Government

Lockdown in the ACT - COVID-19

6 COVID-19 Vaccine Rollout

COVID-19 vaccine rollout update – 7 October 2021 | Australian Government Department of Health

7 ABS – March 2021 Quarter National Accounts

(VIEW LINK)

8 RBA September 2021 Bulletin - Small Business Finance and COVID-19 Outbreaks

COVID-19 vaccine rollout update – 7 October 2021 | Australian Government Department of Health

9 Scottish Pacific 2019 SME Growth Index

10 Scottish Pacific 2020 SME Growth Index