Australia’s 10-year government bond yield rose to 4.48%, its highest in more than six months, after higher-than-expected inflation data reinforced the view that the Reserve Bank’s policy easing cycle may be over. Headline inflation increased to 3.8% in October from 3.6% in September, beating expectations of 3.6%. More importantly, core inflation edged up to 3.3% from 3.2%, also topping forecasts of 3%. This confirmed the central bank’s assessment that its efforts to curb core inflation have encountered obstacles, leading markets to raise expectations that rates could remain on hold for an extended period. Some economists even suggested that this could prompt the RBA to consider rate hikes. Earlier this month, the RBA kept its cash rate steady at 3.6%, citing persistent inflation and a still-tight job market. Last week, Assistant Governor Sarah Hunter noted that the labour market remains too tight for inflation to stay within the central bank’s 2–3% target.
