03.02.202603:51:51UTC+00Australia 10-Year Yield Climbs After RBA Rate Hike

Australia has recently witnessed a notable surge in its 10-year government bond yield, reaching 4.86%, the highest since November 2023. This increase followed the Reserve Bank of Australia's (RBA) decision to raise interest rates by 25 basis points to 3.85%, a move widely anticipated by the market. By taking this action, the RBA stands as the first major central bank to implement a rate hike this year. The decision was driven by various indicators over recent months that have shown a significant intensification of inflationary pressures in the latter half of 2025, alongside a more rapid expansion in private demand than previously expected. Additionally, the policymakers revised their forecasts upward for inflation, growth, and employment for the year, even after accounting for two rate hikes, as outlined in the latest quarterly Statement on Monetary Policy. It is now expected that the trimmed mean inflation will remain outside the target range of 2–3% until 2025 and will not settle at the midpoint before 2027. Market participants are currently waiting for further insights into the RBA’s policy direction during Governor Michele Bullock’s press conference following the meeting.