12.02.202601:48:10UTC+00Aussie Dollar Rallies on RBA Hawkish Signals

The Australian dollar climbed above $0.71 on Thursday, extending its rally to a new three-and-a-half-year high after the central bank signaled it remains firmly hawkish. Reserve Bank of Australia Governor Michele Bullock said the board stands ready to raise interest rates again if inflation proves stubborn, calling any inflation rate “with a three in front of it” unacceptable.

Her remarks echoed comments a day earlier from Deputy Governor Hauser, who warned that inflation is still too high and continues to pose a significant challenge for the rate-setting board. Shortly after Bullock’s speech, a consumer survey showed inflation expectations jumping to 5% in February, the highest level since mid-2025, further reinforcing the hawkish outlook.

Economists now broadly anticipate a possible rate increase in May, as the RBA weighs first-quarter inflation figures alongside forthcoming employment and GDP data. Markets will also be watching a speech by Assistant Governor Sarah Hunter in Perth later on Thursday for additional policy signals.