Australia’s 10-year government bond yield rose to around 4.73% as signs of upward price pressures reinforced expectations of tighter monetary policy by the RBA. The Melbourne Institute reported that Australia’s monthly inflation gauge rose 1% in December, the fastest pace in two years and a sharp increase from 0.3% in the previous two months. This comes after November inflation remained above the RBA’s target, with Deputy Governor Andrew Hauser noting that inflation is still too high. Household consumption also held up in November, signaling strong end-of-year demand and reinforcing signs of economic resilience, while persistent spending risks continue to complicate the RBA’s inflation fight. Market pricing currently implies roughly a 25% chance of a rate hike in February and around 70% in May. Investors are now focusing on the labor market report due this week for clearer guidance on the central bank’s next move.
