Australian GDP grew 0.4% in June quarter as RBA faces pressure to hike rates
Australia's economy expanded 0.4% in the June quarter, exceeding forecasts but raising expectations for Reserve Bank of Australia rate increases amid high inflation.
The Australian economy grew 0.4% in the June quarter and rose 2.1% annually, figures that beat economic forecasts. This growth comes despite a broader market decline where the ASX fell approximately 1% late Wednesday. The stock market dip involved materials and technology sectors dropping more than 3%, as gold retreated around 3% and copper fell roughly 2%. Oil prices exceeded US$95 per barrel after recent United States-Iran military strikes affected the Hormuz Strait. Inflation remains high, creating tension regarding potential rate hikes by the Reserve Bank of Australia (RBA). Consequently, the RBA has a new justification to consider increasing interest rates despite improved economic performance. Meanwhile, Australia's 10-year bond yield climbed to around 5.2%, a level last seen in 2011. Global sovereign yields are near levels observed in 2008. Financial markets now price roughly a 70% probability of a United States interest rate increase this month, compared to about 40% a week prior.
