Australia’s 10-year government bond yield rose to around 4.81%, its highest level since November 2023, underpinned by bets on interest rate hikes from the Reserve Bank of Australia. Investors currently see a 39% chance that the central bank could tighten policy as early as February, with attention now focused on incoming inflation data later this week. November consumer price figures are expected to show a modest easing in headline inflation to 3.7% from 3.8% previously. Core inflation, as measured by the trimmed mean, is also seen edging lower to 3.2%, though this would still leave it above the RBA’s 2%–3% target band. However, some economists warn that core inflation may hold steady in November, raising the risk of a persistently strong fourth-quarter outcome. This view broadly aligns with minutes from the RBA’s most recent meeting, which highlighted growing concern that inflationary pressures were becoming more entrenched.
