Global Inflation Battleground Heads to Australia as Yields Surge
- Core inflation inside RBA’s target for first time since 2015
- Markets are now pricing in three RBA rate hikes by end of 2022
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Australia became the latest battleground for market bets that central banks will need to tighten quicker than planned after its core inflation surged back to the Reserve Bank’s target, driving a sell-off in bonds.
The three-year yield jumped as much as 24 basis points to 1.01% and the April 2024 security the RBA aims to keep at 0.1% soared to double that. Traders are pricing in three interest-rate increases by end-2022 to 0.75%, in a test for RBA chief Philip Lowe who doesn’t see conditions for a hike emerging before 2024.