The Reserve Bank of Australia has raised interest rates for the second consecutive time, causing Australian bond yields and the Australian dollar to fall.

Against the background of escalating conflicts in Iran leading to rising energy costs and possibly exacerbating inflation pressures, the Reserve Bank of Australia raised interest rates for the second consecutive meeting on Tuesday, stepping up its efforts to combat stubborn inflation. The bank raised the cash rate from 3.85% to 4.1%, marking the first consecutive rate hike since mid-2023. The policy statement said that the nine-member policy committee voted five to four to tighten monetary policy. Governor Michele Bullock will hold a press conference at 3:30 pm in Sydney. "The situation in the Middle East remains highly uncertain and could potentially worsen global and domestic inflation in various scenarios," the statement said. "Therefore, the committee believes that inflation may remain above the target level for a period of time, and risks are further tilted to the upside, including inflation expectations." Following the policy decision announcement, Australian government bonds continued to rise and the Australian dollar fell. The 3-year Australian bond yields dropped by 8 basis points to 4.51%, down from 4.56% before the decision was announced. The Australian dollar fell by 0.1% against the US dollar to 0.7065, down from 0.7083 before the decision was announced.