Commerzbank’s Volkmar Baur reports that the Reserve Bank of Australia raised its cash rate by 25 bps to 4.6%, the highest level in about 15 years, and struck a notably hawkish tone. Despite signaling that rates could rise further as inflation broadens beyond energy, the Australian Dollar’s initial gains faded, with markets already pricing nearly two more hikes by mid-2027.

Hawkish RBA meets priced hikes

“As expected, the Reserve Bank of Australia raised its benchmark interest rate by 25 basis points to 4.6% this morning.”

“Furthermore, the central bank made an effort in its communication to sound as hawkish as possible.”

“The AUD initially reacted positively to the decision but quickly gave up those small gains.”