The Reserve Bank of Australia has raised the cash rate by 25 basis points to 4.60%. That’s the highest it has been since late 2011.
This is the fourth rise this year, after increases in February, March, and May. It takes the rate up from 4.35%. The decision was unanimous and unsurprising, with all four major banks forecasting it in the lead-up.
“Inflation remains elevated and some of the upside risks flagged in August are materialising,” the Board said in its statement.
The Board pointed to the widening conflict in the Middle East, which has pushed global energy prices well above what it assumed in its August forecasts. It said higher fuel costs are now partly flowing through to the price of other goods and services. Anyone who has filled up the car lately won’t need that explained. The Board also flagged two other pressures. AI-related demand is driving up global prices for technology goods, and businesses are telling the RBA they’re either raising prices or planning to.
Things to do in Perth
The RBA also noted that the economy is slowing. Housing prices have fallen in most capital cities and new home loans have dropped noticeably. That wasn’t enough to hold off another rise.
What it means for your mortgage
If you’re on a variable rate, expect your repayments to go up. The rise could add more than $100.00 a month to repayments on the average mortgage. That comes on top of the three increases already this year. The big four banks passed May’s increase on in full and are expected to do the same with this rate rise.
For many Perth households already stretched by fuel and grocery bills, it’s another hit.
The Board didn’t rule out further rate rises before Christmas. It said it “will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed.”
ANZ is forecasting another rise in November. That would take the cash rate to 4.85%, the highest since late 2008. Commonwealth Bank and Westpac expect 4.60% to be the peak.
