The Reserve Bank has raised the cash rate for the fourth time in as many months to curb inflation.
Look back at how our experts unpacked what this means for you in our blog.
Key events
- Shadow Treasurer says government needs to assist RBA
- Treasurer says latest rate hike will sting Australians
- RBA confirms it thinks inflation will hit 7.75 per cent this year
- RBA Governor says path to balance economy is 'narrow' and 'clouded in uncertainty'
- RBA raises cash rate target to 1.85 per cent
- PM stands by RBA ahead of expected rate hike
- When will the RBA hand down its decision?
Live updates
By Jessica Riga
This is where we'll leave you
Let's recap what happened this afternoon:
- The Reserve Bank has increased interest rates for the fourth month in a row, raising its cash rate target by half a percentage point
- The RBA has now lifted its benchmark interest rate by 1.75 percentage points since its first rate rise in May, with the cash rate target sitting at 1.85 per cent
- In his post-meeting statement, Reserve Bank governor Philip Lowe said the latest rate rise was unlikely to be the last this year
- So if you have a mortgage, how much will you be paying now? Use our mortgage repayment calculator to find out
Thank you for joining us today and to those who sent in questions. You can continue to stay up to date here on the ABC News website and on our app.
Until next time, goodnight.
By Jessica Riga
What other steps can the RBA take to slow inflation?
What other steps can the RBA take beyond changing the cash rate to slow the rise of inflation?
- Alex
Hey Alex, thanks for your question.
Our business reporter Gareth Hutchens says the RBA doesn't have many tools available to it.
Its main lever is interest rates. There are other things that could be used to reduce inflation, but they're in the government's domain.
By Jessica Riga
Is there a risk the RBA might go too far?
Carlos Cacho, chief economist at Jarden, says policy error "is definitely a risk".
"We're seeing the fastest pace of rate hikes since 1994. We are moving at a very fast speed," he says.
"The lags in the data mean that by the time we actually know we've gone too far, it might be too late.
"So it is going to be a challenge for the RBA to try and keep track of how things are going. They have reiterated that they're going to be watching consumers carefully."
You can watch the full interview below.
By Jessica Riga
Here's a round up of what's happening with property prices across Australia
Australia's median property value has dropped by 2 per cent since the beginning of May to $747,800 — a figure that includes houses and apartments, the latest housing data shows.
CoreLogic research director Tim Lawless says Australia's housing market conditions are likely to worsen as interest rates rise through the remainder of the year.
Below is a state-by-state breakdown of Australia's latest housing figures.
By Jessica Riga
Shadow Treasurer says government needs to assist RBA
The Shadow Treasurer says today's interest rate hike will "sting" households.
The RBA says it will continue to do what's necessary to address rising inflation, and Angus Taylor says the government needs to assist.
"In the absence of a plan from the Treasurer, from the government, the Reserve Bank will have to go harder and faster," he said.
"We need to see a plan from the government, a comprehensive clear plan that addresses the issues that Australians are facing everyday with this cost-of-living challenge that is very real."
By Jessica Riga
When will the rate hikes stop?
When do you think this would stop?
- Gin
Hi Gin, thanks for your question.
Our business reporter Gareth Hutchens says:
At the moment, economists think the RBA wants to end the year with the cash rate sitting at around 3 per cent. It’s currently sitting at 1.85 per cent.
By Jessica Riga
Where do the extra interest payments go?
I get the impact of raising rates on the economy but I am not clear on where the extra interest payments go. I presume the banks aren’t directly profiting from every extra dollar.
- Mike
Hi Mike, thanks for your question.
Here's business reporter Gareth Hutchens with the answer:
The extra interest payments wouldn't all be going straight to the banks' bottom line.
The banks have to juggle things like their own funding costs, their shareholders' interests, the interests of their customers with term deposits and other savings accounts, and which products they might think about cutting rates on to lure new customers to the bank.
So they'll be shifting things around.
By Jessica Riga
Does a rate hike help or hinder wage growth?
Is one of the major issues stagnant wages? Does cash rate hike help with this at all, or hinder wage growth?
- Jess
Hi Jess, thanks for your question.
Our business reporter Gareth Hutchens says it's a big problem.
Wages aren't growing as fast as prices are rising, and that means the purchasing power of your weekly wage is deteriorating. You're getting the same amount of money each week, but that money can't buy as many goods.
And the problem is being compounded by the fact that the prices for things we can't avoid having to buy (like our electricity bills, petrol, rent, and food etc), are rising even faster than the average rate of inflation.
So, the rising cost of living is a real problem.
And the RBA thinks it's wiser to lift rates now and have some short-term pain to prevent inflation getting even worse.
By Jessica Riga
Even with a historic fall in house prices, rents are tipped to rise by as much as 10 per cent. Will they ever go down?
With news that house prices are falling sharply in several capital cities, millions of renters may be looking forward to paying the landlord a bit less.
CoreLogic data released this week shows house prices in Australia are dropping at their fastest pace since the global financial crisis.
The median price in Sydney saw the sharpest value falls in almost 40 years, while values in Melbourne, Hobart, Brisbane and regional Australia also dropped last month.
So rents should fall too, right?
Wrong. For most of the 2.4 million households renting from private landlords, rents will go up at a historically rapid clip over the next year.
In the link below, James Purtill explains why.
By Jessica Riga
Do banks pass these interest rate rises to savings accounts?
Do banks pass these interest rate rise to savings account?
- Apurv
Hi Apurv, thanks for your question.
I've run this by our business reporter Gareth Hutchens, who says:
Some banks have been increasing the interest rates on their savings and saving maximiser accounts, particularly the smaller banks. So check to see if your bank is doing so.
By Jessica Riga
Treasurer says latest rate hike will sting Australians
The federal Treasurer says the latest interest rate rise will sting, even though Australians have been bracing for the hit for some time.
The Reserve Bank has decided to hike interest rates for a fourth-straight month, taking the cash rate to 1.85 per cent.
The RBA says it will continue to do what's necessary to tackle soaring inflation.
Jim Chalmers has told parliament household budgets will feel the pain of the latest increase.
"Now, Australians knew that this was coming, but it won't make it any easier for them to handle. This cycle of interest rates rises began before the election, in response to inflationary pressures that began accelerating at the beginning of this year," he said.
"This decision doesn't come as a surprise, it's not a shock to anybody, but it will still sting. Families will now have to make more hard decisions about how to balance the household budget, in the face of other pressures like higher grocery prices and higher power prices."
By Jessica Riga
The Reserve Bank's rationale behind fourth successive hike
Peter Ryan analyses the RBA's decision to hike interest rates for a fourth consecutive time this year.
By Jessica Riga
How long does it generally take for interest rates to slow down inflation?
How long does it generally take for interest rates to slow down inflation? It seems like this situation is quite unique with so many rate hikes in such a short period of time.
- Dan
Hi Dan, thanks for your question.
Business reporter Gareth Hutchens says it can take a bit of time for rate increases to change people's behaviour.
In this rate-hike cycle, the banks have been quick to pass the rate hikes on so people with variable-rate mortgages will already be feeling the increases and maybe tightening their belts.
However, households currently have over $200 billion in savings left over from the stimulus payments (wealthier households have the most savings, obviously). The RBA will want to see what happens to those savings, because those savings could be used as a buffer against its rate hikes for a while.
And yes, the pace and quantity of these rate hikes are unusual. The last time we saw anything like this was in 1994, when the RBA raised rates by 2.75 per cent in five months.
But that was back when the RBA's official inflation targeting regime had just started, and it was keen to stamp its authority on things.
By Jessica Riga
What does this mean for my mortage repayments?
What does this mean for a $500,000 mortgage?
- Claire
Hi Claire, thanks for your question.
You can use our mortage repayment calculator below to work out the difference.
By Jessica Riga
RBA lifts cash rate by half a percentage point to six-year high
Finance reporter Alicia Barry breaks down of the Reserve Bank's fourth-consecutive cash-rate hike and its implications for mortgage holders.
By Jessica Riga
RBA confirms it thinks inflation will hit 7.75 per cent this year
The RBA has confirmed that it thinks headline inflation will hit 7.75 per cent this year.
Here's business reporter Gareth Hutchens with a quick comparison:
In the September quarter last year, annual inflation was 3 per cent.
But now it's 6.1 per cent and the RBA thinks it will be around 7.75 per cent by the end of the year.
So we can expect more interest rate increases to come this year.
By Jessica Riga
Why does it take so long for the banks to respond to interest rate changes?
Why does it take so long for the banks to respond to interest rate changes? Surry there would be a contingency to change them immediately following an announcement?
- Paul
Let's get back to the questions, starting with this one from Paul (thanks Paul!).
Our business reporter Gareth Hutchens says there's a few reasons behind the timing:
The banks have their own funding arrangements, with their own liabilities and risks to worry about, so they often want to think about what the rate rise means for them.
But they also have their own competitive strategies. They'll keep an eye on each other to see who does what in response to the RBA's rate rise, and they might try to steal some market share from each other with the timing of their own rate change announcement.
By Jessica Riga
RBA Governor says path to balance economy is 'narrow' and 'clouded in uncertainty'
Reserve Bank governor Philip Lowe says the board "is committed to doing what is necessary to ensure that inflation in Australia returns to target over time".
"The Board places a high priority on the return of inflation to the 2–3 per cent range over time, while keeping the economy on an even keel. The path to achieve this balance is a narrow one and clouded in uncertainty, not least because of global developments.
"The outlook for global economic growth has been downgraded due to pressures on real incomes from higher inflation, the tightening of monetary policy in most countries, Russia's invasion of Ukraine and the COVID containment measures in China.
"Today's increase in interest rates is a further step in the normalisation of monetary conditions in Australia. The increase in interest rates over recent months has been required to bring inflation back to target and to create a more sustainable balance of demand and supply in the Australian economy.
"The Board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path. The size and timing of future interest rate increases will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labour market."
By Jessica Riga
RBA raises cash rate target to 1.85 per cent
The Reserve Bank has increased interest rates for the fourth month in a row, raising its cash rate target by half a percentage point.
The RBA has now lifted its benchmark interest rate by 1.75 percentage points since its first rate rise in May, with the cash rate target sitting at 1.85 per cent.
By Jessica Riga
Treasurer to pressure banks to pass on rate rise to those with saving accounts
The Federal Treasurer Jim Chalmers is pressuring banks to pass on interest rate rises to savers who have had record low returns over recent years.
Economists expect the RBA to hike rates by half a percentage point to 1.85 per cent.
Chalmers says the big banks should do the fair thing and apply higher interest rates to customers with savings accounts.
"There needs to be some positives out of this. For savers they need and deserve higher interest rates on their savings. So I will have the oppurtunity to convey to the banks directly my expectation that these interest rate rises get passed on to savers."
