Westpac becomes the first big bank to pass on the RBA's interest rates as cost of living crisis deepens

Westpac is the first big bank to pass on the Reserve Bank's 0.5 per cent interest rate rise, with the remaining "big three" expected to follow suit in the coming days.

The RBA announced the rate rise - the largest in 22 years - yesterday afternoon, and there has been no response from Commonwealth, NAB or ANZ as of this morning.

Households are being warned to expect the same rate rise next month, which would bring the cash rate to 1.35 per cent.

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Monthly rises are set to continue until Christmas, when rates are tipped to peak at 2.5 per cent, meaning Australians will be paying an extra $716 a month on the average $600,000 mortgage.

The pain doesn't end there either, with fixed rates of many mortgages set to expire next year.

Treasurer Jim Chalmers yesterday acknowledged the rate rise would heap even more pressure on family budgets and add to cost of living stress.

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"This inflation challenge will get harder before it gets easier," he said.

The financial pain is not just hurting households, but also makes it more expensive for the government to pay down debt.

Soaring power prices continue to add to the pain for homeowners and renters as well.

Energy Minister Chris Bowen will today meet with state and territory counterparts to decide a response that could involve improving transparency around the gas market.

The ministers will consider giving new powers to regulators to monitor electricity and gas markets.

It comes amid a warning from peak bodies who say there will be intense and lasting pain for households and businesses if a solution isn't reached.

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