Australia’s 10-year government bond yield climbed above 4.9%, hitting its highest level in more than two weeks, as escalating tensions in the Middle East and uncertainty surrounding a fragile US-Iran peace deal stoked inflation fears. Over the weekend, Iran launched several waves of missiles toward Israel as a warning against further Israeli military action in Lebanon, undermining a tenuous ceasefire amid stalled peace negotiations.
The protracted conflict and the near-continuous disruption of traffic through the Strait of Hormuz have constrained energy exports from the Persian Gulf, driving up oil prices and amplifying global inflation pressures. In Australia, Reserve Bank Governor Michele Bullock reiterated last week that the central bank remains firmly committed to bringing inflation back under control, following three interest rate increases earlier this year that raised the cash rate to 4.35%.
Bullock emphasized that inflation is still uncomfortably high and underscored that the RBA board stands ready to take whatever actions it considers necessary to meet its mandate of price stability and full employment.
