Australia’s 10-year government bond yield fell to 4.77%, its lowest level in two weeks, despite hawkish comments from Reserve Bank of Australia’s officials. Deputy Governor Andrew Hauser warned that inflation remains too high and cannot be allowed to persist for much longer, stressing that the central bank is prepared to “do what is needed” to return inflation to the 2-3% target range. Hauser’s remarks followed comments from Governor Michelle Bullock, who said in her testimony to lawmakers last week that higher interest rates remain necessary to cool economic activity and bring demand back into line with constrained supply. The RBA raised its cash rate to 3.85% last week, citing persistent inflation and stronger growth in private sector demand. Markets currently imply a 70% chance of another 25-basis-point hike in May, with around 37 basis points of additional tightening priced in for the rest of the year.
