FX.co ★ Australia 10-Year Yield Edges Down After Soft GDP Data

Australia's yield on 10-year government bonds has dipped slightly to approximately 4.25%, spurred by GDP data that fell short of expectations and bolstered arguments for further monetary easing by the Reserve Bank of Australia (RBA). In the first quarter, the Australian economy grew by 1.3%, mirroring the growth rate of the previous quarter but falling short of the anticipated 1.5%. This sluggish economic performance is largely attributed to a decrease in public spending, alongside weakened consumer demand and exports. Since February, the RBA has enacted two interest rate reductions, lowering the cash rate to 3.85%. Minutes from the central bank’s May policy meeting indicate that there was even consideration for a more substantial 50 basis point cut, in light of escalating economic risks linked to US tariffs. Current market forecasts suggest an 80% probability that the RBA will implement an additional 25 basis point reduction in the cash rate, bringing it to 3.60% at their forthcoming July meeting.