Pendal says bond market signals RBA may be done raising rates
TLT•The RBA raised its cash rate by 25 basis points to 4.85%, but a 6-3 vote and three-year bond yields below the cash rate fueled expectations that tightening may be over. The central bank raised trimmed mean inflation forecasts through 2027 and cut its GDP outlook.
1. Rate decision and outlook
The RBA raised its cash rate by 25 basis points to 4.85%, its highest level since 2008. A 6-3 vote fueled market expectations that tightening may be over, while three-year bond yields fell below the cash rate.
2. Inflation and growth risks
The RBA raised trimmed mean inflation forecasts through the end of 2027 and cut its GDP outlook as household consumption and dwelling investment weakened. Further tightening remains possible if Middle East hostilities persist or AI investment sustains inflationary pressure; an end to hostilities could bring a rapid decline in fuel prices and ease inflation pressures.
