Q2 real GDP numbers were very good and showed an economy that had almost completely recovered to its pre-Covid trend. However, we can expect the economic fallout from the Delta variant to be significant in Q3. The previous experience suggests that the Australian economy will recover again given widespread vaccination and a seeing through of plans for persistent fiscal stimulus. In terms of monetary policy, then, the RBA should stay the course of forward guidance to keep the policy rate at 0.10% until early/mid 2024 at the earliest. Indeed, the RBA should signal that it may need to keep rates lower into late 2024 to ensure inflation expectations persistently move into the top half of its target range. The recent low wages growth and the economic fallout from the Delta variant make the gains in inflation expectations from the RBA’s previous forward guidance somewhat fragile.