Australia’s 10-year government bond yield slipped below 4.95% on Wednesday, retreating from multi-decade highs as oil prices fell on hopes for a ceasefire in the Middle East, while domestic inflation data did little to shift expectations for interest rates.
February data showed consumer prices were flat on the month, bringing the annual inflation rate down to 3.7% from 3.8% in January. Core inflation also came in slightly weaker than anticipated at 3.3%, but it remained above the Reserve Bank of Australia’s 2%–3% target band.
Money markets now imply roughly a 50% probability that the RBA will lift its 4.1% cash rate at its May 5 meeting, with rates potentially rising to around 4.75% by the end of the year.
At the same time, oil prices fell following reports that the United States was stepping up diplomatic efforts to end the conflict with Iran, including a proposed one‑month ceasefire and a 15‑point plan aimed at resolving the war. Investor caution, however, remained elevated after Tehran denied that it was engaged in any talks with Washington.
