FX.co ★ AUS 10-Year Yield Rises on Surprise RBA Hold

Australia's 10-year government bond yield increased to approximately 4.29%, nearing a four-week peak, following the Reserve Bank's unexpected decision to maintain interest rates, defying predictions of a 25 basis point reduction. Policymakers pointed out that the current market environment permits them to await further clarity on inflation trends. They expressed that they could "afford to wait for additional information to confirm that inflation is consistently progressing towards the 2.5% target." The Reserve Bank of Australia (RBA) also acknowledged that, while recent monthly Consumer Price Index (CPI) data from the June quarter largely aligns with forecasts, the figures were marginally stronger than anticipated. Concurrently, Australia's labor market has remained robust with a steady unemployment rate of about 4.1% over the past year, outperforming the RBA’s forecasts from May. The central bank reaffirmed its dedication to diligently monitoring new data and evolving risks, which encompass global financial conditions, domestic demand, and projections for inflation and employment.