RBA Wrongfoots Market With Outsized Hike, Sending Yields Soaring

Australia’s central bank surprised investors by raising interest rates by twice as much as forecast and committing itself to “doing what is necessary” to rein in broadening inflationary pressures.

Bond yields soared and stocks fell as the Reserve Bank of Australia raised its cash rate by 50 basis points -- the biggest increase in 22 years -- to 0.85%, a result predicted by just three of 29 economists.

Central banks worldwide are grappling with worse-than-anticipated inflation driven by disruptions to the supply of goods and energy amid virus lockdowns in China and Russia’s war on Ukraine. Australia now joins ...