Bond markets still expect the next move from the Reserve Bank of Australia will be to raise interest rates this year rather than cut them, even as the Fair Work Commission on Monday kept an increase to the minimum wage below 4 per cent to avoid stoking inflation.

The independent pay-setting body raised minimum wages by 3.75 per cent to help low-income earners cope with high costs of living, saying it would be “inappropriate” to go higher because of poor labour productivity. More than 2.6 million workers will benefit from the increase.