The Australian dollar climbed above $0.70 to a five-week high after stronger-than-expected inflation data sharpened expectations of a fifth interest rate increase this year. Annual inflation accelerated to 4.3% in September from 4.0% in August, overshooting the 4.2% consensus forecast and marking its highest reading since March. This renewed pickup pushed inflation further beyond the RBA’s 2–3% target band, reinforcing market bets on a rate hike at the November 3 meeting. Monthly CPI rose 0.8%—the largest gain in six months and above the 0.7% forecast.
The figures landed shortly after comments from RBA Governor Michele Bullock on Wednesday, who warned that upside risks to inflation were materializing and that price pressures were likely to exceed the central bank’s August projections. She also cautioned that a prolonged overshoot of the target could entrench inflation expectations and shape future price- and wage-setting behavior. Following the data, traders lifted the implied probability of a November hike to 78%, up from 70% prior to the inflation release.
