FX.co ★ Australia 10-Year Yield Rises After Hot Monthly CPI Data

Australia's 10-year government bond yield advanced towards 4.30% on Wednesday, reaching its highest point in over two weeks. This movement was driven by monthly inflation figures surpassing expectations, bolstering the argument for maintaining current interest rates. Annual headline inflation climbed to a one-year peak of 3% in August, up from 2.8% in July, slightly exceeding the market's forecast of 2.9%. This rate now aligns with the upper threshold of the Reserve Bank of Australia's (RBA) target range of 2–3%. Consequently, investors have increased their expectations that the RBA will refrain from adjusting interest rates next week, with the anticipated likelihood of a rate cut in November decreasing to 60%, down from nearly 70% ahead of the data release. The recent stream of economic data has generally been robust, further supporting the central bank's cautious approach. Furthermore, RBA Governor Michele Bullock stated on Monday that the economy is performing well in terms of both growth and inflation, indicating there is no immediate need to reduce rates in the near future.