The outlook is largely unchanged from the September meeting. The latest data clearly confirms the downturn in NSW, Victoria and the ACT, but it also signals that elsewhere momentum remains positive.

Moving through the rest of 2021, the relaxation of restrictions should be a catalyst for the economic recovery in the lockdown states, although the profile is likely to be bumpy, both because easing will almost-certainly be somewhat disjointed, and because households and businesses will have to adjust to a new COVID-normal environment.

With the lockdowns only likely to interrupt the recovery (rather than disrupt it), I continue to expect inflationary pressures to justify a first cash rate rise in mid-2023.