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ABC News

Business

Why are interest rates going up? What does inflation have to do with the Reserve Bank’s decision?

Reserve Bank Interest Rates Inflation Nicki Hutley Philip Lowe Angela Jackson

Reserve Bank Governor Philip Lowe says inflation could reach up to 7 per cent by the end of the year. (ABC News: John Gunn)

The Reserve Bank has increased the cash rate by 0.5 percentage points. The new cash rate is now 1.35 per cent.

Announced at the RBA's monthly meeting this afternoon, the rate hike comes after it jumped by 50 basis points last month.

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