Investors are getting their head around the fact that monetary policy is going to remain accommodating for a long, long, long time, he said.

The 104-page statement revealed downgraded estimates for Australia suggesting the economy will not be strong enough to withstand an interest rate rise until at least 2023.

Mr Miller now expects the RBA to do more easing, which would be good for domestic banks. The banks share prices increased significantly amid low trading volumes on Monday. Commonwealth Bank shares gained 3.4 per cent to $73.98, National Australia Bank shares gained 3 per cent to $17.46, taking the stock back to where it was on the last day in July. Similarly, Westpac gained 3.3 per cent to $17.36 on below-average trading volumes, and ANZ Bank gained 2.7 per cent to $18.17.

Portfolio manager at Tribeca Investment Partners Jun Bei Liu said there was some optimism in the market thanks to Victorias lower COVID-19 infection numbers. The state remains in Stage 4 lockdown but on Monday recorded 322 infections, the lowest in two weeks.

Banks were sold off on fears the recession may last longer than expected, she added. The financial sector dropped 2.7 per cent last week and has been stuck in a trading range since June.

Property trusts and travel names did very well on Monday, Ms Liu added, with Scentre Group up 3.4 per cent to $1.99 and Webjet up 4.2 per cent to $3.24.

Among the consumer staples cohort Blackmores, Woolworths, and Coles enjoyed the best gains. The vitamin-maker gained 3.1 per cent to $74.50, Woolies gained 2.8 per cent to $40.04 and Coles was up 2.6 per cent to $18.85.

News Corp gained 6.5 per cent to a nearly-six months high of $20.81 after a flurry of analyst upgrades following last weeks results.

Utilities also out-performed on Monday with APA Group up 3 per cent to $11.44, Spark Infrastructure up 3.6 per cent to $2.31, and AusNet Services up 2 per cent to $1.83.

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As it happened: Banks fuel 1.8% ASX surge to three-week high - The Sydney Morning Herald