International News 26 February 2026
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Australia Inflation Surprises to the Upside, Raising RBA Rate Hike Risks
Australia’s consumer inflation rose more than expected in January, while core inflation climbed to its highest level in 16 months, increasing the likelihood of further tightening by the Reserve Bank of Australia (RBA). Data released by the Australian Bureau of Statistics showed monthly CPI increased 0.4% in January, above the 0.3% consensus forecast, driven by higher housing, healthcare, and clothing costs. On an annual basis, headline inflation held at a high 3.8%. Meanwhile, the trimmed mean core inflation measure rose 0.3% month-on-month, pushing the annual rate to 3.4%, up from 3.3% in December and marking the highest level in 16 months—remaining above the RBA’s 2%–3% target range for the seventh consecutive month. Earlier this month, the RBA raised its policy rate by 25 basis points to 3.85%, following renewed inflationary pressures after three rate cuts last year, with a still-tight labor market supporting price pressures. The central bank previously projected headline inflation to reach 4.2% by June and core inflation to rise to 3.7%. Financial markets reacted swiftly: the Australian dollar strengthened 0.2% to US$0.7073, while three-year government bond futures fell. Markets now price in an 80% probability of a May rate hike, up from 76% prior to the data release, with swaps implying around 40 basis points of additional tightening this year. Governor Michele Bullock is scheduled to respond to the CPI data at an event at the University of Melbourne, potentially offering further guidance on the policy outlook.
Fed Officials Signal No Urgency for Rate Cuts Amid Inflation Uncertainty
Two U.S. Federal Reserve officials indicated there is no immediate need to adjust interest rates, tempering market expectations for additional rate cuts this year. According to Reuters, while some investors still anticipate further easing, policymakers argue that a relatively stable labor market and uncertain inflation outlook do not warrant urgent action. Federal Reserve Bank of Boston President Susan Collins said rates will likely remain at current levels for some time, emphasizing a patient and cautious approach given multiple possible economic scenarios. Similarly, Thomas Barkin, President of the Richmond Fed, stated that monetary policy is well-positioned to manage risks to the economic outlook. Both officials described the labor market as “low-hire, low-fire,” reflecting subdued hiring but limited layoffs, signaling overall stability. However, they stressed the need for clearer evidence that inflation—still above the Fed’s 2% target—is sustainably easing before considering further rate cuts. Although recent Supreme Court rulings and renewed tariff measures under President Donald Trump were noted, the officials believe the broader economic impact will likely be limited. After cutting rates by a total of 0.75 percentage points last year to a range of 3.5%–3.75%, the Fed held rates steady at its late-January FOMC meeting. Policymakers suggest future decisions will remain highly data-dependent, particularly on inflation trends in the coming months.
OCBC Sees Stable 2026 Revenue Despite Margin Pressure; Q4 Profit Beats Estimates
Oversea-Chinese Banking Corp (OCBC) expects its 2026 total income to remain stable or grow slightly, even as net interest income (NII) is projected to decline modestly amid global uncertainty and easing interest rate trends. Singapore’s second-largest bank said lower rates are likely to compress margins, with net interest margin (NIM) falling to 1.86% in the fourth quarter from 2.15% a year earlier. However, return on equity (ROE) is expected to stay stable or improve, supported by a strategic focus on higher-yielding businesses. Group CEO Tan Teck Long said the bank remains cautious but positive, noting that geopolitical tensions, trade dynamics, and interest rate uncertainty continue to cloud the global outlook. In Q4, net profit rose 3% year-on-year to S$1.74 billion, beating analysts’ S$1.69 billion estimate, driven by a 37% surge in non-interest income to S$1.32 billion, supported by strong growth in wealth management fees (+26%), trading income (+30%), and insurance revenue, which more than doubled. Full-year 2025 ROE eased to 12.6% from 13.7%. OCBC reaffirmed its 50% ordinary dividend payout ratio and aims to complete its S$2.5 billion capital return plan this year. The bank proposed a final dividend of 42 Singapore cents per share, bringing total ordinary dividends for 2025 to 83 cents, alongside a special dividend of 16 cents—resulting in a total payout of 99 cents, slightly below the previous year’s 101 cents. OCBC’s results conclude a mixed earnings season among Singapore banks. DBS Group reported earnings that missed expectations, while United Overseas Bank (UOB) posted softer performance but still exceeded forecasts. Globally, Standard Chartered reported a 16% rise in annual pre-tax profit, while HSBC is set to release its results later the same day. OCBC’s key markets—Singapore, Greater China, Indonesia, and Malaysia—leave its outlook closely tied to broader regional and global economic conditions.