Australia’s government bond yield climbed to 4.64%, its highest level since mid-January, as hawkish signals from the Reserve Bank outweighed weak GDP data. The economy expanded 0.4% in the September quarter, falling short of the projected 0.7%. The yearly growth rate came in at 2.1%, slightly below the market forecast of 2.2% but marginally above the RBA’s estimate of 2.0%. The GDP release followed remarks from RBA Governor Michele Bullock, who said that the economy may have already reached its potential growth limit, noting that the output gap has likely closed. Traders now expect the RBA to keep interest rates on hold for most of next year, with odds nearly evenly split on a possible rate hike by late 2026. Last month, the RBA left the cash rate at 3.6%, citing caution about further easing amid a strong economy, a still-tight labor market, and persistent inflation.
