RBA Governor Michele Bullock said further interest rate rises are possible if inflation remains stubborn. She said the board will stay data-dependent and keep reassessing its forecasts.<\/p>\n
The RBA expects both headline and core inflation to sit above its 2\u20133% target band this year. This follows the latest cash rate rise to 3.85%, with another increase possible if needed.<\/p>\n
Australia\u2019s February consumer inflation expectations rose by 0.4 percentage points to 5.0% on the 30% trimmed mean measure. This moved expectations back above 5% after seven straight months below that level.<\/p>\n
The increase in expectations was cited as support for lifting the cash rate target to 3.85%. The article notes it was produced using an artificial intelligence tool and reviewed by an editor.<\/p>\n
We are seeing signals that further rate hikes could be on the table if Australian inflation does not cool down. Governor Bullock has made it clear that inflation remains too high, a view supported by the recent January 2026 monthly CPI which came in at 3.6%. This persistent price pressure keeps the Australian Dollar and local bond yields on edge.<\/p>\n
This feels very similar to the pattern we saw throughout 2025, where stubborn inflation kept the RBA on a hawkish footing. A key concern now is that consumer inflation expectations have ticked up again to 4.5% in the latest February report. This is a metric the Board watches closely, as rising expectations can become a self-fulfilling prophecy for prices.<\/p>\n
For traders in the rates market, this suggests the potential for yields to push higher. We could see positions that benefit from a steeper yield curve or bets that the cash rate will peak higher than currently priced in. The recent climb in the 10-year government bond yield past 4.30% supports this hawkish view.<\/p>\n
In the currency space, this environment is supportive for the Australian dollar, especially against currencies with more dovish central banks. We should consider strategies that profit from AUD strength, such as buying call options on the AUD\/USD. This allows for upside exposure while defining the risk if the RBA unexpectedly softens its stance.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Bullock warns further RBA rate hikes possible if inflation stays high; expectations rebound above 5%, cash rate 3.85%.<\/p>\n","protected":false},"author":62,"featured_media":16967,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41718","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41718","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41718"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41718\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16967"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41718"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41718"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41718"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}