FX.co ★ Australia 10-Year Yield Falls After RBA Decision

Australia's 10-year government bond yield has dipped to approximately 4.50%, pulling back from levels not seen in over four months, as market participants assessed the latest policy stance from the Reserve Bank of Australia (RBA). The central bank opted to reduce its benchmark interest rate by 25 basis points, a move widely anticipated by analysts, while highlighting increasing downside risks facing the economy. Officials acknowledged that inflation is expected to fall and unemployment is likely to rise, partly due to the ongoing effects of global trade uncertainties, even if interest rates are lowered as aggressively as current market expectations suggest. Data from the March quarter reaffirmed a further easing of inflationary pressures alongside a decline in potential upside risks. New forecasts suggest that headline inflation is likely to hover around the mid-point of the RBA's target range of 2–3% for most of the forecast period. These circumstances have left the possibility open for additional rate cuts, subsequently applying downward pressure on bond yields.