Australia’s 10-year government bond yield rose to around 4.25%, rebounding after briefly touching a four-week low, as a sharp rise in inflation prompted a reassessment of the monetary policy outlook. The TD-MI Inflation Gauge surged 0.9% in July, the highest monthly increase since December 2023, reinforcing the RBA’s lingering concerns about supply chains and consumer demand. The RBA still expects core inflation to ease gradually but remain in the upper half of its 2–3% target range through late 2025, while headline inflation is forecast to approach the top of the range by year-end and stay elevated into 2026 as household energy subsidies are phased out. Governor Michele Bullock also recently warned of external risks, including a fragile global outlook, which could fuel imported inflation and disrupt Australia’s trade-dependent economy. Helping ease trade concerns, the US left the 10% baseline tariff on Australian goods unchanged.