The Australian dollar and bond yields dropped as traders drastically trimmed bets of further rate increases amid caution in the statement.
The central bank raised the cash rate by 25 basis points to 4.35 per cent on Tuesday, the first policy move in five months, after a run of stronger-than-expected inflation and retail sales reports forced governor Michele Bullock’s hand.
, markets were still wrong-footed after the RBA ended its statement with a softer stance on future rate increases. Australian bond yields also fell, as bond traders drastically trimmed bets of further rate increases. Markets are now implying an around 50 per cent chance the RBA will lift rates again, compared with last week when they were fully priced for a move to 4.6 per cent.
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