The Reserve Bank of Australia has increased the official cash rate to 4.35 per cent at its November meeting, delivering fresh cost of living pain to Aussies ahead of Christmas.
Homeowners across Queensland are gearing up for a financial jolt as interest rates experience their first increase in four months.
This anticipated rise, set to be mirrored by major banks in full, is poised to tack on an additional $15 to monthly repayments for every $100,000 borrowed, specifically impacting those with variable home loans.
RBA governor Michele Bullock said: “Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago.”
“The latest reading on CPI inflation indicates that while goods price inflation has eased further, the prices of many services are continuing to rise briskly.”
The inflation and retail sales data indicates that Australians are still spending, despite the financial pain of the past year, and pose a challenge to the RBA’s goal of returning inflation to between two and three per cent by late 2025.
As of September 30, the headline annual inflation rate in Australia was 5.4 per cent and Ms Bullock said it was expected to hit around 3.5 per cent by the end of the year.
“The Board judged an increase in interest rates was warranted this week, to be more assured that inflation would return to target in a reasonable timeframe,” Ms Bullock said.
David Robertson, chief economist of Bendigo and Adelaide Bank, emphasises that recent economic indicators compel the Reserve Bank of Australia (RBA) to raise interest rates, citing the RBA’s limited options in the matter.
He predicts the current round of interest rate hikes is just the beginning, as stemming inflation is deemed to be “non-negotiable” by the RBA.
Mr Robertson goes on to caution that even if inflation data in the next quarter doesn’t prompt a rate hike in February, there may be no reprieve for Australians, as a potential increase in May looms, based on first-quarter 2024 inflation figures.