RBA holds rates at 4.1% at Bullock's first meeting as governor

The news: The Reserve Bank kept the cash rate on hold at Michele Bullock's first meeting as RBA governor. Bullock said inflation had passed its peak but was still too high and would remain so for some time.

The numbers: Interest rates have been increased by 4 percentage points since May 2022 and have been steady at 4.10% since the RBA's June meeting. The cash rate is currently at its highest level since April 2012.

The context: Hawkish undertones from US Federal Reserve officials overnight sent bond yields flying today, with Australia's 10-year note jumping roughly 8 basis points to 4.57%, its highest level since November 2011. Three-year bonds also lifted six basis points to 4.13%, as sticky inflation has pushed hopes for RBA rate cuts into 2H 2024. Bond traders have also increased their expectations for another RBA rate increase in 2023, the Australian Financial Review reports, from a 62% probability last week to 69% this week.

What they said: "The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome," Bullock said in a statement.