Australia Hikes Rates, Aussie Dollar Sees Limited Gains

The Reserve Bank of Australia (RBA) hiked interest rates by 25 basis points to 4.60%, its highest level in 15 years, but the Australian dollar only gained fleeting support from the move.

The RBA's decision was widely expected by markets, limiting the immediate reaction in currency markets and bond yields.

The cash rate hike is the fourth this year, and futures imply a 44% chance of another move in November, with December odds at 60%. Consumer price data for August is due on Wednesday, forecast to show an acceleration to 4.1% from 3.5%, driven in part by a jump in fuel costs.

Katherine Palmer, head of fixed income strategy at BlackRock Australia, said the upcoming inflation data will be 'an important gauge of the extent of domestic price pressures' and a key input into the policy outlook.