SYDNEY — Australia’s central bank on Tuesday raised its benchmark policy rate for the first time in two years, saying the economy was growing faster than expected and inflation was likely to remain above target for some time.

The Reserve Bank of Australia now joins the Bank of Japan in being the only other developed-world central bank tightening policy at the moment. Markets are still priced for rate cuts in the US, UK and Canada, while the European Central Bank is widely expected to be on an extended pause.

Wrapping up the February policy meeting, the RBA raised interest rates by 25 basis points to 3.85%, delivering the first hike in two years, and coming just six months after its last cut in August.

Markets had wagered on a 78% probability of a hike on Tuesday given inflation surprised on the high side in the fourth quarter, while unemployment hit a seven-month low in December.

“While part of the pick-up in inflation is assessed to reflect temporary factors, it is evident that private demand is growing more quickly than expected, capacity pressures are greater than previously assessed and labor market conditions are a little tight,” the RBA’s board said in a statement.

“The board judged that inflation is likely to remain above target for some time and it was appropriate to increase the cash rate target.”

The Australian dollar extended earlier gains to be up 1.1% to $0.7020 while three-year government bond futures tumbled 9 ticks to 95.65.

Investors ramped up bets for a follow-up hike in May, which is now priced at 75%. Markets expect an additional total tightening of 40 basis points this year.

INFLATION SURPRISE SET TO KEEP RBA ON TOES

The RBA did not raise interest rates as aggressively as its international peers when inflation was running hot due to its desire to preserve gains in the labor market.

That approach may yet test policymakers. The central bank’s three rate cuts last year saw inflation rear its head again, forcing it to pivot towards a hawkish stance late in 2025 and prompting market bets of an earlier-than-expected start to the tightening cycle.

Consumer price growth has surprised on the upside for two straight quarters now, and is well above the RBA’s target band of 2% to 3%. Underlying inflation, the central bank’s preferred measure, ran at a quarterly pace of 0.9% in the fourth quarter, lifting the annual pace to the highest in over a year at 3.4%.

The recent flow of data has only served to reinforce the need for a quicker-than-expected turn in monetary policy levers, with a surprise fall in the unemployment rate to a seven-month low of 4.1% suggesting the labor market may have started to tighten again.

Robust consumer spending, record-high housing prices and easy credit availability for households and businesses added to the case that financial conditions might not be restrictive at all.

In its separate economic update, the RBA said it was uncertain that financial conditions were restrictive and some indicators suggested they may have been accommodative.

It saw the risk of persistently high inflation even on the technical assumption of more than two rate hikes this year. — Reuters

PARIS — France finally got a 2026 budget on Monday, when two no-confidence motions failed, allowing the legislation to pass and heralding a period of relative stability for Prime Minister Sebastien Lecornu’s weak minority government.

Budget negotiations have consumed the French political class for nearly two years, after President Emmanuel Macron’s 2024 snap election delivered a hung parliament just as a massive hole in public finances made belt-tightening more urgent.

The budget talks have cost two prime ministers their jobs, unsettled debt markets and alarmed France’s European partners.

However, Mr. Lecornu – whose chaotic two-stage nomination in October drew derision around the world – managed to secure the support of Socialist lawmakers through costly but targeted concessions, boosting his stature in the process.

“France finally has a budget. A budget that embraces clear choices and essential priorities. A budget that reins in public spending, which does not raise taxes for households and businesses,” Mr. Lecornu said in a post on X after the no-confidence votes, adding he was submitting the budget to the Constitutional Court to ensure it was compliant with the constitution.

Despite the still-elevated budget deficit of 5% of GDP seen by Mr. Lecornu, investors have taken heart in the new stability. The French government debt risk premium over the German benchmark has returned to levels last seen in June 2024, before Mr. Macron’s snap-election announcement.

Two votes of no-confidence triggered by the hard-left and far right fell short of getting a majority after the Socialists said they would not back them, which means the 2026 budget – already more than a month overdue – is now adopted.

The Socialists’ main scalp was the suspension of an unpopular pension reform, delaying the planned increase in the retirement age to 64 until after next year’s presidential election.

REFORMS ON PAUSE UNTIL PRESIDENTIAL ELECTION

With just over a year to go before the next presidential election in the spring of 2027, the respite on the budget front is giving Mr. Macron some breathing space, as he nears the end of his second term with historically low approval ratings.

Having lost control of the domestic agenda, his push for supply-side economic reforms has largely stalled. Meaningful spending cuts are unlikely before he leaves office, with lawmakers showing little appetite for unpopular measures as election campaigning intensifies.

Mr. Macron’s supporters say Mr. Lecornu, by showing flexibility and an ability to compromise, has prevented the return of wealth taxes and preserved Mr. Macron’s legacy of making France more attractive to foreign investors.

The president is now focusing almost entirely on foreign policy, pushing Europe to be less dependent on foreign powers, and advocating a harder line in confronting US President Donald Trump over tariffs or the Greenland crisis.

At home, however, he leaves his centrist bloc without a clear successor and significantly weakened against a resurgent far right.

Two of Mr. Macron’s former prime ministers are gearing up for the presidential race, Edouard Philippe and Gabriel Attal, while Mr. Lecornu has also gained popularity over the past few months.

But should the center remain fragmented, and with no primary planned, it remains uncertain whether a mainstream candidate will reach the election’s second round to face the far right, whether led by Jordan Bardella or Marine Le Pen. — Reuters

DAKAR — The United Nations peacekeeping mission in Congo will send its first team to monitor a ceasefire between Congo’s government and the AFC/M23 rebel group in the coming days, Qatar’s foreign ministry said on Monday after hosting talks in Doha.

Qatar said the team would be deployed to Uvira, a strategic city in eastern Congo that AFC/M23 fighters captured in December during a rapid offensive, and which Congolese forces and allied militias re‑entered last month, restoring government control after the rebels announced they would withdraw.

The announcement late Monday is a sign of progress in Doha-mediated direct talks between Congo and the AFC/M23 rebels, who last year seized more land than they had ever held before in eastern Congo. The United States is hosting separate talks between Congo and Rwanda, which the United Nations and Western powers say backs AFC/M23, an allegation Kigali denies.

The Qatari foreign ministry said on Monday that Congo and M23 had agreed on detailed terms of reference for the ceasefire monitoring mechanism created under an agreement reached in October, and reaffirmed their commitments under the broader peace deal framework signed in November.

The latest push to activate ceasefire monitoring comes amid persistent fighting in the east.

Over the weekend explosive‑laden drones targeted the airport serving the northeastern Congolese city of Kisangani, Congolese authorities said.

If confirmed to be an AFC/M23 operation, it would be the furthest west the group has struck as part of its offensive against the government in Kinshasa. — Reuters

VENEZUELA’S government and the US embassy said on Monday that interim President Delcy Rodriguez met with US envoy Laura Dogu, as the two countries gradually resume bilateral relations broken in 2019.

The government said in a statement that the meeting took place at the Miraflores presidential palace to discuss “the work agenda between the Bolivarian Republic of Venezuela and the United States.”

Foreign Minister Yvan Gil added in comments on state television that the conversation covered the “common agenda” between the two countries, especially energy, trade, political and economic issues.

He added that Felix Plasencia, a prior foreign minister who also served as the country’s ambassador to China, will travel to Washington in the coming days to serve as Venezuela’s “diplomatic representative.”

Ms. Rodriguez’s brother, head of the National Assembly legislature Jorge Rodriguez, attended the meeting, the government said, as did Mr. Gil, with whom Ms. Dogu met over the weekend following her arrival in Caracas.

“The governments of Venezuela and the United States have set out to advance on a roadmap to address matters of bilateral interest, through diplomatic dialogue and on the basis of mutual respect and international law,” the statement added.

The US embassy in Venezuela said on social media that Ms. Dogu met with Venezuelan officials to “reiterate the three phases that US Secretary of State Marco Rubio had outlined for Venezuela: stabilization, economic recovery and reconciliation, and transition.”

After months of heightened tensions, the US captured Venezuela’s President Nicolas Maduro a month ago, setting off a chain of changes in the country, including the swearing in of Ms. Rodriguez, the passage of a reform to its flagship oil law and the release of some political prisoners. Ms. Rodriguez has said she is seeking “balanced and respectful international relations” with the US, while Mr. Trump has said the relationship with the interim government is going well.

The two countries have reached a deal to export up to $2 billion worth of Venezuelan crude to the United States, and on Friday Ms. Rodriguez announced a proposed “amnesty law” for hundreds of prisoners in the country, a move long demanded by the opposition and human rights groups. — Reuters