Australian Bond Exchange Weekly Update
27th Mar 2026
Key Points
- Australia: The RBA increased cash rates by 0.25% to 4.10% p.a. at its March meeting. February CPI decreased slightly to 3.70% p.a., and the Trimmed Mean was 3.30% p.a.
- United States: The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% p.a. at its February 2026 meeting, signalling one rate cut in 2026. The latest U.S. CPI inflation rate 2.4% (YoY) as of February 2026.
- United Kingdom: The Bank of England held Bank Rate steady at 3.75% p.a. and CPI for February was unchanged at 3.0% p.a.
- Eurozone: The European Central Bank kept its key deposit facility rate unchanged at 2.00% p.a., and recent data show inflation in the euro area increased slightly to 1.90% p.a., up from 1.70% in January.
| Region | Policy Rate | Latest Inflation (YoY) |
|---|---|---|
| Australia | RBA Cash rate 4.10% p.a. | 3.70% p.a. to February 2026 |
| United States | Fed Funds 3.50-3.75% p.a. | 2.40% p.a. to February 2026 |
| United Kingdom | Bank rate 3.75% p.a. | 3.0% p.a. to February 2026 |
| Eurozone | Deposit facility rate 2.00% p.a. | 1.90% p.a. to January 2026 |
February Inflation Print Reinforces RBA Hawkish Bias
The February 2026 monthly CPI indicator showed headline inflation easing marginally to 3.7% (YoY) from 3.8% in January, with the monthly print essentially flat. Underlying inflation, as measured by the trimmed mean, held at around 3.3% p.a., remaining clearly above the RBA’s 2–3% target band.
Housing remains the dominant contributor, with rents, construction costs, and electricity prices elevated, the latter reflecting the rolling off of government rebates and structural energy cost pressures. Food and discretionary categories such as recreation are also contributing, but to a lesser extent and with signs of moderation. Against this backdrop, the Reserve Bank of Australia remains in a tightening bias.
Fuel Crunch Drives Prices Higher
Rising fuel and energy costs are now feeding directly into the real economy, lifting freight and logistics expenses and driving sharp increases in diesel and fertiliser prices. This is already translating into higher input costs for agriculture and manufacturing, with food prices emerging as an early pressure point. At the same time, emerging supply chain disruptions and localised fuel shortages across parts of Australia are compounding these effects, increasing the risk that the energy shock evolves into a more persistent and broad-based uplift in goods inflation.
Predictable Income in an Unpredictable World
While global markets remain complex and volatile, bonds and fixed income continue to offer opportunities for steady income with predictable outcomes. Investors know what is being paid, when payments occur, and when principal is due at maturity.
Sydney Airport 2030 Inflation-Linked Bond:
A Great Way to Hedge Against Inflation
We are currently building a book for the Sydney Airport CPI+3.12% 2030 inflation-linked bond, which offers an attractive way to hedge your fixed income portfolio against inflation. Please email us or contact your advisor if you are interested.
How does an inflation-linked bond work?
Inflation-linked bonds are bonds where the value and/or interest payments increase with inflation. When inflation rises, the bond’s principal is adjusted upward, and the coupon is paid on the upward-adjusted principal. This helps protect your money’s purchasing power from rising prices.
*Data accurate as at 27.03.2026
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