Bank of Japan Governor Signals Gradual Progress Toward 2% Inflation Target 
BOJ Holds Interest Rates Steady Amid Middle East Uncertainty 
ANZ and Westpac Forecast Two RBA Rate Hikes in March and May 2026 
Japan's BOJ Independence Under Fire as PM Takaichi's Rate Stance Draws Political Heat 
Fed May Tighten Policy if Inflation Stalls Despite Weak Labor Market 
J.P. Morgan Now Expects Two ECB Rate Hikes Amid Inflation Pressures 
Bank of Japan Expected to Hold Rates at 0.75% Before June Hike Amid Middle East War Uncertainty 
RBA Raises Cash Rate to 4.10% in Closest Vote Since Transparent Voting Began 
RBA Signals Possible March Rate Hike as Energy Risks Threaten Inflation Outlook 
The market has increased pricing of the risk of further easing due to the transmission of weaker regional growth. The AUD may need further depreciation on a TWI basis considering the current pressure on the terms of trade. Inflation break evens are falling with the 3y breakeven around 1.70% currently, well below the base of the RBA target zone at 2.0%.
This may be distorted by supply of inflation-linked bonds, but even so it should be a reminder of policy risks. Wages growth remains weak so there does not appear to be a risk to inflation should the Bank decide to support growth via easier policy, especially a recent hikes in borrowing rates for investors in housing has tightened policy at the margin and means the transmission mechanism for easier policy is more muted.
The China devaluation has reinforced the seasonal bias for bond yields to fall. With month-end approaching, equity stresses moving to extreme levels and further policy responses expected, this seasonal bias is expected to fade.
"We note signs of weaker underlying demand at tenders, increasing pressure on fiscal balances as a result of slower growth and commodity price weakness and risk of some adjustments by reserve managers in EM Asia response to regional currency pressures", says BofA Merrill Lynch.
