FX.co ★ Australia 10-Year Bond Yield Rises

Australia's 10-year government bond yield increased to approximately 4.73%, as indicators of rising price pressures heightened expectations for a more stringent monetary policy from the Reserve Bank of Australia (RBA). According to the Melbourne Institute, the country's monthly inflation gauge surged by 1% in December — marking the most rapid acceleration in two years — rising significantly from the previous two-month rate of 0.3%. This development comes after November's inflation figures remained above the RBA's target range, with Deputy Governor Andrew Hauser emphasizing that inflation levels are still excessively high. Additionally, household consumption maintained its strength in November, indicating robust year-end demand and further underscoring the economy's resilience. However, ongoing spending concerns continue to complicate the RBA's efforts to control inflation. Presently, market projections suggest about a 25% likelihood of an interest rate increase in February, growing to around 70% by May. Investors are now closely anticipating the labor market report, due this week, for more definitive insights into the central bank's forthcoming actions.