The Aussie dollar slumped and bond yields fell in lockstep following the Reserve Bank of Australia’s begrudging decision to raise its cash rate from 4.1 per cent to 4.35 per cent, still just a sliver above its estimate of the “neutral” rate around 3.8 per cent.

The counter-intuitive reaction of the exchange rate and long-term yields to what should have been a hawkish move after another inflation surprise was explained by governor Michele Bullock’s decision to dovishly downgrade her commitment to future hikes.