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

Australia's 10-year bond yield has risen to 4.23%, marking its highest point in two weeks, following an inflation report that exceeded expectations and diminished hopes for an immediate interest rate reduction. The annual inflation rate climbed to 3.2% in the third quarter, up from 2.1% in the previous quarter, surpassing market expectations of 3% and breaching the Reserve Bank's target range of 2-3%. Notably, the trimmed mean inflation, a key indicator preferred by the RBA for underlying price pressures, increased to 3% from the prior 2.7%, also above the forecasted 2.7%. Consequently, the likelihood of a rate cut by the central bank at its upcoming meeting has been significantly reduced, with the market now pricing in just an 8% probability, down from 40% before this latest data release. Earlier in the week, Governor Michele Bullock minimized concerns over the recent uptick in unemployment and highlighted the board's prudent approach.