RBA interest rates: Reserve Bank hikes cash rate for fifth time this year in blow to mortgage holders
Summary
Australia’s Reserve Bank raised its cash rate by 0.25 percentage points to 4.85%, marking the fifth increase this year. The bank cited rising inflation and warned that price pressures could persist, while forecasting weak economic growth and no recession over the next two years.Key Facts
- Six members of the RBA’s monetary policy board voted for the rate increase, while three favored holding rates steady.
- The cash rate is now at its highest level since 2008.
- Inflation reached 4.3% in the year to September, above the RBA’s expectations.
- Canstar estimated the latest increase will add $107 to monthly interest payments on a $700,000 home loan; all five increases this year add $532 a month.
- The RBA forecast inflation would fall below 3% by the end of next year, within its target range of 2% to 3%.
- The bank forecast economic growth of 1.6% this year and 1.3% in 2027, below its estimated potential rate of about 2%.
- The RBA projected unemployment would rise from 4.7% to about 4.9% by the end of next year and exceed 5% in 2028.
- The RBA said global oil prices would ease over the next 18 months but remain relatively high.
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