For the fourth consecutive month the Reserve Bank of Australia (RBA) has hiked interest rates as inflation runs rampant.
At 2.30pm during the RBA’s monthly meeting, it increased Australia’s interest rate by 50 basis points, or by 0.5 per cent.
The decision brought the cash rate from 1.35 per cent to 1.85 per cent, largely in line with economist’s predictions.
This marks the first time the RBA has lifted the rates for four months in a row since the introduction of the two to three per cent inflation target in 1990.
This follows last week’s increase in annual inflation, which hit 6.1 per cent, which was its highest level in 21 years since 2001.
Tuesday’s rate rise means those paying off the average home loan of $500,000 will need to cough up an extra $140 a month.
And the August hike isn’t expected to be the last, with economists forecasting that interest rates could peak up to two per cent by the end of the year.
It comes as Australia’s cost of living crisis is worsening, making borrowers even more cash-strapped than usual.
In the last quarter, transport costs rose 13.1 per cent as the price of fuel rose to record levels for the fourth quarter in a row.
Meanwhile, grocery shopping is also causing hip pocket pain, with Australians outraged to find lettuce heads selling for $10 a pop and capsicums marked at $15 for a kilo.
Interest rates in Australia reached an all time high of 17.5 per cent in January 1990. Since then, they have averaged 3.93 per cent.
Before this year, the last time the RBA hiked up rates was in 2010. It has only been going down ever since.
As a result, more than one million home borrowers have never experienced an increase in mortgage rates, because they bought a home after 2010.
The official cash rate has been at a record low of 0.1 per cent since November 2020 in response to the Covid-19 pandemic until May 2022.
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