Australia’s 10-year government bond yield rose to 4.33% on Wednesday, approaching its highest level in over three weeks, as higher-than-expected monthly inflation data complicates the path forward for the Reserve Bank. Headline inflation accelerated to a one-year high of 2.8% in July, from 1.9% in June and above market expectations of 2.3%, driven mainly by higher electricity costs. Underlying inflation also rose to 2.7%, the highest in three months, from 2.1% in the previous month. The data comes just a day after the release of the RBA’s latest meeting minutes, which reiterated the central bank’s openness to further interest rate cuts, provided inflation continued to ease in line with its forecasts. However, today’s data cast doubts on how soon the RBA can move forward with monetary easing. Even so, markets remain confident that rate cuts could resume in November.
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