The central bank increased the official cash rate by 25 basis points to counter persistent inflation driven in part by conflict in the Middle East. More than 3.3 million households will face higher borrowing costs, with typical $700,000 mortgages seeing monthly payments jump by $107. Ahead of the decision, Treasurer Jim Chalmers noted that higher repayments would intensify financial strain on families. Consequently, two major financial institutions have lowered their growth forecasts, with Commonwealth Bank analysts projecting a prolonged economic slump.
Key points
More than 3.3 million Australian households holding mortgages now face significantly stee…: More than 3.3 million Australian households holding mortgages now face significantly steeper monthly borrowing expenses.
Consecutive interest rate increases are fueling intense political pressure on the federal…: Consecutive interest rate increases are fueling intense political pressure on the federal government's broader economic management.
Major banks have reduced their economic growth forecasts amid fears of a sharper and more…: Major banks have reduced their economic growth forecasts amid fears of a sharper and more prolonged national slowdown.
Sources checked by our analysis pipeline: 1
The Reserve Bank has hiked rates for the fifth time this year, from 4.6% to 4.85%, in an attempt to regain control of surging inflation amid an ongoing global oil shock triggered by the war in the Middle East.
The RBA’s decision to hit mortgage holders again is no surprise after inflation jumped to 4.3% in the year to September and comes following tough talk from senior central bank officials over recent days and weeks.
The cash rate has now reached its highest level since 2008.
Back-to-back hikes will heap more pain on over 3.3m households with home loans and turn the screws on a federal government under pressure for its economic management.
The latest rate rise will lift the monthly interest payment on a $700,000 home loan by $107, according to Canstar, bringing the total rise in repayments over this year’s five hikes to $532.
Prior to the announcement, Jim Chalmers, the treasurer, said “people are under substantial pressure already”, adding that higher borrowing costs would “make things much harder”.
Tuesday’s decision comes amid rising fears of the growing…
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