FX.co ★ AUS 10Y Yield Falls to 2-Week Low

Australia’s 10-year government bond yield declined to 4.77%, its lowest level in two weeks, even as Reserve Bank of Australia officials continued to strike a hawkish tone. Deputy Governor Andrew Hauser cautioned that inflation remains unacceptably high and cannot be allowed to persist, emphasizing that the central bank is ready to “do what is needed” to bring inflation back to its 2–3% target band. His comments followed Governor Michelle Bullock’s testimony to lawmakers last week, in which she reiterated that further interest rate increases are still required to cool economic activity and realign demand with constrained supply. The RBA raised its cash rate to 3.85% last week, citing stubborn inflation and stronger growth in private sector demand. Money markets now imply a 70% probability of an additional 25-basis-point hike in May, with roughly 37 basis points of further tightening priced in over the remainder of the year.