Australian Bond Exchange Weekly Update
17th Feb 2026
Key Points
- Australia: The RBA increased cash rates by 0.25% to 3.85% p.a. at its February meeting – the first hike since 2023. CPI inflation rose 3.8 % the 12 months to December 2025, up from 3.4 per cent the previous month. Underlying inflation (trimmed mean) was 3.3% over the year to December 2025
- United States: The Federal Reserve left the federal funds rate unchanged at 3.50%–3.75% p.a. at its January 2026 meeting, signalling a pause in the easing cycle amid mixed economic data and inflation that remains above target. The latest U.S. CPI inflation rate 2.4% (YoY) as of January 2026.
- United Kingdom: The Bank of England held Bank Rate steady at 3.75% p.a. in early February 2026. CPI rose by 3.4% in the 12 months to December 2025, up from 3.2% in November 2025
- 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 slowing to around 1.7% (YoY), down from 2.0% in December.
Here are the latest monetary‑policy and inflation figures for key economies:
| Region | Policy Rate | Latest Inflation (YoY) |
|---|---|---|
| Australia | RBA Cash rate 3.85% p.a. | 3.8% p.a. to December 2025 |
| United States | Fed Funds 3.50-3.75% p.a. | 2.4% p.a. to January 2026 |
| United Kingdom | Bank rate 3.75% p.a. | 3.4% p.a. to December 2025 |
| Eurozone | Deposit facility rate 2.00% p.a. | 1.7% p.a. to January 2026 (flash estimate) |
Market Insights
- RBA back in tightening mode
- U.S. January Jobs Report stronger than expected
- We are working on a new A$ Credit Linked Note – Details coming shortly
RBA back in tightening mode as inflation reasserts itself
The Reserve Bank of Australia has resumed policy tightening, lifting the cash rate by 25 basis points to 3.85% at its February meeting, marking the first increase since late 2023. The decision reflects renewed concern about inflation, with underlying price pressures proving more persistent than previously expected and domestic demand remaining resilient. Governor Michele Bullock signalled that returning inflation sustainably to the 2–3% target band may take longer, prompting the Board to act pre-emptively. Market pricing has shifted in response, with investors now assigning a meaningful probability to rate hikes further later in 2026 should inflation and labour market conditions remain firm. For fixed income markets, the move reinforces a higher-for-longer policy bias, supporting upward pressure on short-dated yields while increasing sensitivity to upcoming inflation and wage data.
The recent CBA result highlighted the strength in our economy, with Business lending for the six months to December increasing by 12% and home loans increasing by 7% from the previous year. In addition, CBA reported that 87% of their customers are ahead of their mortgage payments, problem loans declined, and deposits surged.
U.S. labour market stronger than expected
The U.S. economy added 130,000 jobs in January, ahead of market forecasts, with unemployment at 4.3%. Yields on the U.S. Treasury bonds moved higher on the back of this release as the data reduced expectations for the Fed to cut rates in the near term. However, uncertainty of the quality of the data and downward revisions to prior job growth suggest that underlying momentum may be softer than previously reported, adding some uncertainty.
New ABE Credit-Linked Note coming soon!
Financial market conditions continue to be very challenging, and recent volatility once again highlights the importance of defensive, reliable fixed-income products in your portfolio. We are working on a new Credit-Linked offering, which we expect to make available in the near future. This investment will follow the familiar ABE structure: A$ Credit-Linked Notes in leading global companies, a 4–5-year term, and targeting a fixed coupon in the range of 6%–6.5%p.a. We will provide further details once our comprehensive research and rigorous due diligence process have been completed.
*Data accurate as at 17.02.2026
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