Financial markets are starting to price in the possibility that interest rates in Australia will climb above 5 per cent early in the new year after the central bank fired a warning shot on inflation this week.
The Australian dollar climbed to a three-week high of US70.28¢ on Thursday, having soared 1 per cent in just four days, while three-year bond yields jumped 10 basis points to 4.94 per cent, as the market rapidly repriced its rate expectations for the Reserve Bank of Australia’s next policy meeting.
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