More mortgage problems for millions of Australians as the Reserve Bank raises rates to their highest level in 11 years after a shock rise in inflation…
- The Reserve Bank raises the cash interest rate to 4.1 percent
- Last 25 basis point increase 12th since May 2022
The Reserve Bank of Australia has raised interest rates by a further 25 basis points – the 12th increase in just over a year.
The cash rate has now risen to an 11-year high of 4.1 percent and will add $97 to monthly payments on a typical $600,000 mortgage.
Governor Philip Lowe said inflation was still too high after the April reading showed inflation rising from 6.3 percent to 6.8 percent.
“Inflation in Australia is past its peak, but it is still too high at 7% and it will take some time to get back into target range,” he said.
Dr. Lowe said this would be far from the last increase, even though inflation had eased to 7 percent in the March quarter, down from a 32-year high of 7.8 percent in the December quarter.
“Some further monetary policy tightening may be needed to ensure that inflation returns to target within a reasonable timeframe, but that will depend on how the economy and inflation evolve,” said Dr Lowe.
As a result, a borrower with an average mortgage of $600,000 will pay an additional $97 each month after the last interest rate hike of 0.25 percentage points.
Borrowers have now weathered 12 rate hikes since May 2022, marking the most severe pace of monetary policy tightening since the target rate era began in 1990.
Interest rates have not risen this aggressively since 1989, when they hit 18 percent.
The Reserve Bank of Australia has raised interest rates by a further 25 basis points – the 12th increase in just over a year