The Reserve Bank of Australia has increased the official cash rate 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 decision, which brings the cash rate to its highest level since 2008, follows inflation jumping to 4.3% in the year to September and comes after tough talk from senior central bank officials over recent days and weeks.
Impact on mortgage holders
Back-to-back hikes will heap more pain on over 3.3 million households with home loans and turn the screws on the federal Labor 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.
Economic concerns
Prior to the announcement, Treasurer Jim Chalmers 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 toll from sharply higher interest rates. Two major banks on Monday slashed their growth forecasts for the Australian economy, with CBA analysts warning of a “sharper, longer slowdown”.
