FX.co ★ Australia 10Y Yield Hovers Near 14-1/2-Year High

Australia’s 10-year government bond yield eased to 4.84%, remaining close to its highest level since July 2011 amid mounting expectations of another interest rate increase next week. RBA Deputy Governor Andrew Hauser said on Tuesday that higher oil prices could push inflation above the central bank’s 4.2% forecast, warning that the conflict in the Middle East may compel the RBA to raise rates within days. His comments reinforced signals from Governor Michele Bullock, who said last week that a rate hike is a “live” option, amid concerns that a sustained rise in oil prices could complicate efforts to bring inflation under control. An increasing number of economists now expect the RBA to deliver a 25 bps hike next week, followed by another increase in May to 4.35%, which would be the highest level since February 2025. Markets are currently pricing in a 75% probability of a hike, up from less than 30% earlier this week, with roughly 60 bps of additional tightening implied over the remainder of the year.