Australia’s 10-year government bond yield fell below 5%, hitting a one-week low as markets assessed the monetary policy outlook after the Reserve Bank delivered a widely expected 25bp hike to 4.35%. In an eight to one vote, the central bank raised the cash rate for a third consecutive meeting, returning it to levels last seen at the peak of the post-pandemic inflation surge, underscoring its focus on bringing inflation back to the 2–3% target. The decision marked a more hawkish stance than the split seen in March, though policymakers signalled that monetary policy is now “well placed to respond to developments,” hinting at a possible pause ahead. Markets now see only a 20% chance of another move in June, while a further increase toward 4.60% by September remains fully priced. Meanwhile, a jump in oil prices driven by the US-Israeli conflict with Iran led the RBA to sharply raise its inflation forecast to near 5% while lowering its growth and employment outlooks.