FX.co ★ Australia 10Y Yield Hovers Near 2-Year High

Australia's 10-year government bond yield recently hovered at approximately 4.77%, marking its highest point in over two years. This movement reflects growing investor anticipation of potential future policy tightening. Minutes from the Reserve Bank of Australia's meeting revealed a waning confidence among policymakers regarding the sufficiency of current restrictive monetary measures. They expressed heightened concern over the possibility of inflation pressures being more persistent than initially anticipated. The board members deliberated on scenarios that might necessitate interest rate increases in 2026 if inflation risks materialize, all while emphasizing that any future policy adjustments would be contingent on economic data. Markets have fully integrated the expectation of a rate hike in the first half of 2026, and the probability of an additional increase by the end of the year remains high. Several leading banks have adjusted their forecasts to predict earlier tightening measures, pointing to factors such as excess demand, a robust labor market, and sluggish productivity growth. The Australian 10-year yield is projected to achieve an approximate 9% annual gain in 2025.