Australian Bond Exchange Weekly Update
19th Mar 2026
Market Insights
- RBA increased cash rates by 0.25% to 4.10% p.a.
- The Federal Reserve left policy rates unchanged at 3.50%-3.75% p.a.
- U.S. February Producer Price Index (PPI) increases strongly
Key Points
- Australia:
The RBA increased cash rates by 0.25% to 4.10% p.a. at its March meeting. January CPI increased to 3.80% p.a., and the Trimmed Mean was 3.4% 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. in early February 2026. CPI declined to 3.0% in the 12 months to January 2026, down from 3.4% in December 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.
| Region | Policy Rate | Latest Inflation (YoY) |
|---|---|---|
| Australia | RBA Cash rate 4.10% p.a. | 3.8% p.a. to January 2026 |
| United States | Fed Funds 3.50-3.75% p.a. | 2.4% p.a. to February 2026 |
| United Kingdom | Bank rate 3.75% p.a. | 3.0% p.a. to January 2026 |
| Eurozone | Deposit facility rate 2.00% p.a. | 1.7% p.a. to January 2026 (flash estimate) |
RBA increased cash rates by 0.25% to 4.10% p.a.
The RBA monetary policy board increased the cash rate by 0.25% to 4.10% p.a., in response to ongoing domestic inflation pressures. The RBA warns inflation could be above its 2.50% midpoint target until at least 2028!
The RBA Governor commented that “Higher petrol prices will add to inflation, but they are not the reason for today’s decision.” She further stated that “Inflation was already too high, reflecting the fact that demand is outstripping supply.” The bond market is already pricing in further increases, as reflected in 1 and 2-year government bond yields, currently at 4.54% and 4.57% respectively
The Federal Reserve left policy rates unchanged at 3.50%-3.75%
The Federal Reserve left policy rates unchanged at 3.50% to 3.75% at its March meeting, maintaining a pause that had been widely anticipated by markets. While the decision itself contained few surprises, the accompanying guidance and Chair Jerome Powell’s remarks reinforced a more cautious and slightly hawkish tone. “In the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy,” Powell said in a press conference. Updated projections show inflation running above prior expectations, influenced in part by elevated energy prices tied to ongoing geopolitical tensions.
U.S. February Producer Price Index (PPI) increases strongly
February PPI rose 0.7% (MoM), the strongest increase in seven months and well above expectations. On an annual basis, producer prices accelerated to 3.4%, marking the highest year-over-year reading in roughly a year. The latest US producer price data showed a clear upside surprise, reinforcing ongoing inflation pressures at the wholesale level.
Why is this important: The producer price pressures are reaccelerating, increasing the risk that companies will pass higher costs on to consumers, which would add upward pressure on overall inflation. This reinforces the higher or longer-rates narrative.
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.
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*Data accurate as at 19.03.2026
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