FX.co ★ Australia 10Y Yield Stays at 2-Month Low

Australia’s 10-year government bond yield hovered around 5.1%, staying close to its lowest level since August after a split decision by the Reserve Bank of Australia and guidance that was less hawkish than markets anticipated, both of which tempered expectations of further interest rate hikes. As expected, the central bank lifted the cash rate by 25 basis points to 4.85%, its fifth increase this year, pushing borrowing costs to their highest level since December 2008. The move responded to persistent, broad-based inflation underpinned by elevated fuel and commodity prices, domestic capacity constraints and AI-driven demand for technology goods. However, the hike had been largely priced in, and the 6–3 vote—with three policymakers preferring to leave rates unchanged—alongside the removal of explicit forward guidance on additional increases, signaled a possible pause in December. Investors now turn their attention to Governor Michele Bullock’s press conference in Sydney for further indications on the future path of interest rates.