FX.co ★ AUS 10-Year Yield Rises on Hot CPI Data

Australia's 10-year government bond yield surged to 4.48%, marking its highest point in over six months. This rise follows inflation data that exceeded expectations, leading to the belief that the Reserve Bank's cycle of policy easing may have concluded. In October, headline inflation escalated to 3.8% from 3.6% in September, surpassing the anticipated 3.6%. More crucially, the trimmed mean inflation, the RBA's favored gauge of underlying price pressures, inched up to 3.3% from 3.2%, beating the forecasted 3%. This data suggests the central bank's attempts to rein in core inflation are facing challenges, prompting market analysts to speculate that interest rates could remain unchanged for a prolonged period. Some economists even hypothesize that persistent strong inflation might compel the RBA to contemplate rate increases. Earlier this month, the RBA opted to keep its cash rate steady at 3.6%, citing caution over further easing due to ongoing inflationary pressures and a consistently tight labor market.