Interest rates live updates: Aussies smashed by fifth rate hike of the year

Michele Bullock is speaking at her regular post-meeting press conference.

She says surging oil prices are not the reason Australians have been hit with another interest rate rise, instead pointing to problems closer to home.

Bullock said today’s increase to 4.85 per cent targeted domestic capacity constraints that were already evident before the Middle East conflict.

“We are not tightening monetary policy because of the direct impact of oil prices on inflation,” she said.

Bullock pointed to persistently weak productivity and stronger-than-expected investment, including spending linked to data centres, as factors fuelling demand when the economy is already stretched.

That may be a blow for Treasurer Jim Chalmers, who has repeatedly pointed to the impact of the war in the Middle East, including high oil prices, as the main reason for surging inflation and rising rates.

Addressing the media, Treasurer Jim Chalmers denied that federal spending drove this year’s five interest rate hikes.

When Nine's national affairs editor Andrew Probyn asked how many hikes could be blamed on government spending, Chalmers pointed to the RBA’s latest forecasts.

“Our budgets are not what’s putting upward pressure on inflation,” he said.

Chalmers said public demand growth had eased substantially over the past year while private demand growth had almost tripled, with the war in the Middle East also playing a major role.

He said the government would still look for further savings, with more to be announced in next month’s mid-year budget update.

Oxford Economics Australia says the RBA may be done hiking for now after lifting the cash rate to its highest level since 2008.

Economist Harry McAuley said high oil prices and stubborn inflation drove today’s decision, but further increases are not expected in the near term.

“Based on current conditions, we aren’t expecting further rate hikes in the near future,” he said.

However, McAuley warned another hike could still be possible if oil prices remain above $US100 a barrel into 2027 or domestic inflation remains too high.

Macquarie Bank has wasted no time in passing on today’s hike to its customers.

It will increase variable home loan rates by 0.25 per cent, as well as the interest paid on transaction and savings accounts by the same amount.

The changes will come into effect on November 19.

“With household budgets already feeling the strain, today’s decision by the RBA will be challenging for many Australians,” Macquarie’s head of personal banking, Ben Perham, said.

“To help our variable home loan customers prepare, we’re again waiting more than two weeks before this latest increase takes effect.

“At the same time, our transaction and savings account customers will see their variable rates increase, with no monthly fees or complex hoops or catches to navigate.

“If you are facing financial hardship or are worried about meeting your home loan repayments, please reach out to our specialist team to understand what financial assistance options may be available.” 

Struggling mortgage holders now face more than $6,000 in extra repayments after the Reserve Bank of Australia delivered yet another interest rate hike.

The central bank agreed to increase the official cash rate by 25 basis points in an attempt to curb inflation at its monetary policy meeting on Tuesday. 

The RBA board was split on its decision, with six members voting to raise rates, while three voted to keep them on hold.

The hike is the fifth for the year and takes the cash rate to an 18-year high of 4.85 per cent, with Treasurer Jim Chalmers labelling the decision as “difficult news” for Australians.

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Chalmers is facing increasing pressure over his spending after inflation came in hotter-than-expected at 4.3 per cent last week.

The RBA has acknowledged that federal and state government spending was contributing to inflation.

Continuing on in his statement, Chalmers once again put the blame on the war in Iran adding to inflationary pressures.

“Inflation is higher than anyone would like and the conflict in the Middle East is making our existing inflation challenge much worse,” he said.

The treasurer said the government took responsibility for “our part” of the inflation battle.

“We’re helping with the cost of living at the same time as we manage the budget responsibly and address Australia’s long-standing productivity challenge,” he said.

“Budgets aren’t the primary driver of prices in the economy, but responsible economic management plays a helpful role.“

Labor has found $180 billion in savings since coming into government, albeit not net savings.

The government has promised to find some more by the mid-year budget update in December.

Treasurer Jim Chalmers says today’s decision was “difficult news” for Australians.

“Today’s decision was widely expected but that doesn’t make it any easier for Australian families and businesses to absorb,” he said in a statement.

“Australians are already struggling and this will stretch their budgets even further.

“The full impacts of the previous rate rises earlier this year haven’t been fully felt yet and will slow our economy further when they are.”

While today’s decision was expected, the RBA Monetary Policy Board was split on whether to hike.

Six members voted to hand down the increase, while three voted to keep rates on hold.

If you want a silver lining, that probably points to another hike in December appearing quite unlikely.

Alright, it’s almost time for the decision.

Remember, we get the RBA’s decision at 2:30pm (AEDT), as well as its in-depth forecasts in its Statement on Monetary Policy.

We’ll then hear from Treasurer Jim Chalmers at 3:10pm, before RBA Governor Michele Bullock stands up 20 minutes later.