2026.01.0702:13:03UTC+00Australian Dollar Hits 15-Month High

The Australian dollar advanced to approximately $0.675 on Wednesday, reaching its highest level in fifteen months. This upward movement was supported by strong expectations for an imminent interest rate increase, despite a modest decline in the latest inflation figures. November's data revealed that the headline Consumer Price Index (CPI) increased by 3.4% year-over-year, a decrease from October's 3.8% and below the anticipated 3.6%. Additionally, the closely-monitored trimmed mean inflation measure dropped to 3.2% from 3.3%. Despite the decline, these figures still significantly exceed the Reserve Bank of Australia's (RBA) target range of 2% to 3%, leaving the door open for a potential rate hike next month. Investors are now focused on the comprehensive fourth-quarter inflation report, expected later this month. Analysts caution that an increase of 0.9% or greater in core inflation could prompt the RBA to tighten rates at its February meeting. The central bank has already indicated that the current cash rate of 3.6% might require an upward adjustment if inflationary pressures do not subside. Financial markets currently assign a 35% probability to a February rate increase, with expectations for a 3.85% cash rate almost fully priced in by May.