Australia Reverses Course with Rate Hike, Markets Bet on More

Australia's central bank was forced to reverse course and raise interest rates on Tuesday as it struggles to bring inflation under control in a supply-constrained economy, leaving markets wagering further hikes would be needed this year, Reuters reported. The Reserve Bank of Australia now joins the Bank of Japan as the only other developed-world central bank tightening policy at the moment. Markets are still priced for rate cuts in the U.S., UK and Canada, while the European Central Bank is widely expected to be on an extended pause.
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Australia's Inflation Slows in November, But Core Sticky

Australian consumer prices rose by less than forecast in November, data showed on Wednesday, but core inflation showed enough stickiness that investors still saw a risk interest rates would have to be hiked as early as next month, Reuters reported. The Australian dollar initially slipped but was back to where it was, at $0.6734. Three-year government bond futures rose 5 ticks before giving up gains to be slightly lower on the day at 95.78. Investors still see a 33% risk that the Reserve Bank of Australia will be forced to hike rates again in February.
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