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Business news and updates: Daily roundup (August 4, 2021)

Dynamic Business brings you a daily rundown of the most recent business news and developments from Australia and around the world. Here’s the roundup for August 4: 

Unemployment rate may rise: RBA warns

The Reserve Bank of Australia has warned the unemployment rate is expected to increase in the near term due to the extended lockdowns which will see the economy contract in the September quarter.

This is largely the result of the lengthy virus lockdown in Greater Sydney and regional NSW areas. Last month’s lockdowns in Victoria and South Australia are also likely to leave a negative mark, as will the current restrictions in Queensland.

RBA also expects the jobless rate will resume its downward trend, reaching 4.25 per cent at the end of 2022 and four per cent a year later. The unemployment rate fell to a decade low of 4.9 per cent in June.

Treasury says snap lockdowns are essential

Treasurer Josh Frydenberg has warned until 70 per cent of Australians are vaccinated, it is an economic imperative that governments move fast to get on top of coronavirus cases.

The treasurer was providing a briefing on the Treasury’s modeling in conjunction with that of the Doherty Institute, which has set vaccination levels of 70 and 80 per cent to lessen the need for lockdowns and free-up state and international borders.

The Treasury found that at 50 and 60 per cent vaccination rates, it is five times more costly to the economy should governments not move early to get on top of the virus, and instead, they should move quickly to contain an outbreak.

Reserve Bank stays Australia’s official cash rate at 0.1 per cent

The Reserve Bank of Australia has maintained the official cash rate at a historic low of 0.1 per cent despite the nation’s economic recovery turning out stronger than earlier expected.

The central bank reiterated it would not increase the cash rate – the interest rate on unsecured overnight loans between banks – until actual inflation was sustainably within the 2 to 3 per cent target range, which it does not expect to happen before 2024.

RBA moves ahead with unwinding stimulus despite extended lockdowns

Recent COVID-19 outbreaks are interrupting economic recovery in Australia, but the Reserve Bank of Australia (RBA) still plans to push ahead with winding back its weekly bond purchases. 

RBA governor Phillip Lowe announced that the central bank is maintaining the cash rate and April 2024 Australian government bond targets of 0.10 per cent. 

Mr. Lowe reiterated that it will not increase the cash rate until inflation is within the two to three per cent target range, which is not forecasted to be met until 2024.

The bank will also continue to purchase government securities at the rate of $5 billion a week until early September, and then $4 billion until mid-November.

Bitcoin tanks after harsh new tax rules

The price of bitcoin tumbled almost 5 per cent, dropping below $54,000 per coin again after reaching as high as $57,800 over the weekend. Bitcoin was last exchanging hands for about $53,700 per coin, according to Coinbase data.

A US weekend rally propelled bitcoin to its highest price since mid-May, but the crypto is still almost 40 per cent below its peak of nearly $88,000 per coin in April.

The latest bout of downward trading comes after the latest version of the U.S. Senate’s infrastructure bill left questions hanging over how it might impact cryptocurrencies, especially with regard to taxes.

China’s tech clampdown continues

The more than US$1 trillion of market capitalization losses tied directly to Xi’s recent policies has China bulls mutating into China bears.

First, it was Jack Ma’s Ant Group getting stomped on by Xi’s regulators. Then Didi Global and the $100 billion private tutoring sector got the boot. Next up is Tencent Holdings, China’s top social media, and video game platform.

Vodafone-Idea promoter’s stake offered to government amid going concern doubts

The chairman of the troubled telecom company Vodafone Idea, Kumar Mangalam Birla has expressed willingness to give up his promoter stake in the company to the government. 

This is the first time a promoter of this joint venture has made such a request.

In a letter to Union Cabinet Secretary Rajiv Gauba, Birla expressed willingness to offer his stake in Vodafone-Idea to any state-owned or “domestic financial entity” to keep the company afloat.

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