Australia’s central bank has announced another rate hike, marking the ninth consecutive increase aimed at controlling inflation. The Reserve Bank of Australia (RBA) lifted the cash rate by 25 basis points to 3.35%—the highest level in over a decade.RBA Governor Philip Lowe stated that more rate hikes are likely, as inflation remains elevated globally. However, he noted signs of moderation due to falling energy prices, easing supply chain issues, and tighter monetary policy. Lowe cautioned that inflation may take time to return to the RBA’s target range of 2–3%.
Mortgage Repayments Rise After Rate Hike
The latest rate hike adds $114 to monthly repayments on a $750,000 home loan. Since rate increases began in May 2022, some borrowers have seen their monthly costs rise by $1,362.
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RBA’s Outlook and Inflation Concerns
Governor Lowe expects the cash rate to rise by another half percentage point in the coming months. The RBA started raising rates from a record low of 0.1% in May 2022 after inflation surged.
Despite these hikes, inflation hit 7.8% in December—its highest in over 32 years. Core inflation, excluding food and energy, reached 6.9%. These figures remain well above the RBA’s target, prompting continued monetary tightening.
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Economic Impact of the Rate Hike
Higher interest rates have slowed demand, helping reduce inflation. However, they’ve also increased debt repayment costs and challenged household budgets. Treasurer Jim Chalmers faces pressure to address rising mortgage stress and explain the economic strategy.
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