RBA Rate Hike Debate Reignited as Australian Inflation Surges

The Reserve Bank of Australia (RBA) is facing renewed pressure to raise interest rates after hotter-than-expected inflation data was released in January 2025.

The consumer price index (CPI) rose 3.4% in the 12 months to December 2024, exceeding market expectations and challenging the RBA's previous guidance that the next move in rates would likely be a cut.

Core inflation also accelerated, rising to 3.8% from 3.5%, sending the Australian dollar higher and bond yields spiking as traders priced in a higher probability of a rate increase at the RBA's next board meeting in February 2025.