Interest rates have risen for five consecutive months, a period of increase that has felt very sudden for borrowers.
It was only at the end of 2020 Reserve Bank Governor Philip Lowe was saying interest rates probably wouldn't rise until 2024.
But since April this year the official cash rate target has risen every month, from 0.10 to 2.35 per cent.
That's an increase of 2.25 per cent in five months, the most rapid increase in nearly three decades.
The last time rates rose this fast was in 1994 when the Reserve Bank of Australia hiked rates from 4.75 to 7.5 per cent.
That was a 2.75 per cent rise in five months.
What was happening in 1994?
The government and RBA announced a bold new target to keep inflation between 2 and 3 per cent, on average, over the cycle.
Australia's economy had struggled with high and chaotic inflation throughout the 1970s and '80s.
And when Australia fell into recession in the early '90s, inflation fell too — to around 2 per cent.
So in 1994 when inflation threatened to rise again, the RBA moved swiftly to stamp it out.
RBA officials wanted everybody to know their new inflation targeting regime would work precisely because they would lift interest rates whenever necessary.
So that's what they did. The RBA hiked interest rates 0.75 percentage points to 5.5 per cent in an effort to keep that inflation figure low and steady.
It was the first rate rise in five years, and RBA governor Bernie Fraser said it was "necessary to help sustain non-inflationary growth into the future".
Mr Fraser said economic recovery after the recession had been stronger than expected, and he also expected that growth to continue.
He said the aim of increasing rates wasn't to end that recovery, but rather "help reduce the risks of the economy overheating".
To that end, the RBA hiked rates four more times from September to December, to 7.5 per cent.
It wasn't until August 1996 before they began to come down.
The reason? The RBA board felt the inflation outlook was a lot better.
"Underlying inflation is consistent with the 2–3 per cent objective," Mr Fraser explained at the time.
"The economy has the capacity to grow a little faster than at present without threatening this objective."
What did Australians think at the time?
The rapid rise back then may not have hit borrowers the same way it is now.
Throughout that volatile period of the '70s and '80s, the cash rate target peaked at 19 per cent — an almost inconceivable figure now.
Professor Shaun Bond, an economist from the University of Queensland, said the rapid rise in 1994 was actually quite small in comparison to what many people had lived through.
"For anyone who had a mortgage at that time, they would have been used to much higher rates," he said.
Professor Bond also explained that people are in a very different place now.
Household debt, for example, is much larger.
"Now interest rates have been low for a while, people wouldn't have thought things would increase like this," Professor Bond said.
"One of the big unknowns is how households might respond to these rate increases."
What's happening now?
Professor Bond said to understand why rates are rising so fast now it's worth looking back to 2019.
Australia had just gone through an intense bushfire season and there was a sense the economy was slowing.
The pandemic in 2020 shocked the public health system and the uncertainty, border closures and lockdowns "essentially brought the economy to a standstill".
That's when the federal government and RBA stepped in to provide support payments and interest rates were cut to zero.
"It was a lot like a natural disaster," Professor Bond said.
Because interest rates were so low, and because of what was happening with the pandemic, people left the capital cities and could buy bigger houses outside in regional areas.
And that led to a big boom in house prices.
"[When] the economy opened back up and things were doing well — the outlook started to improve and governments stopped their payments and COVID support," professor Bond explained.
"The RBA governor said because of the uncertainty, he thought interest rates could remain low through to 2024."
But continued disruptions to supply chains — fuelled by strict lockdowns in China — led to bottlenecks.
So you have a booming economy and problems getting goods due to COVID, which in turn puts pressure on prices.
You also have the increasing cost of housing putting pressure on consumers.
And Russia's invasion of Ukraine only added more fuel to the fire, by pushing up energy prices.
So when inflation began to pick up the RBA was under pressure to increase the cash rate target to bring inflation back to its target range.
What will happen next?
The RBA has signalled it expects two more rate increases in this tightening cycle.
"They expect some of the pressures and unique situations that have led to inflation will moderate, Professor Bond said.
"Some heat will be taken out of the housing market … and there's been growth in the labour market."
But Professor Bond said there was no crystal ball to really know how long this period of higher interest rates will last.
