Interest rates decision LIVE updates: RBA hikes rates to 15-year high

Speaking to reporters from Brisbane, Chalmers says the government is doing all it can to fight inflation.

“We take the inflation challenge in our economy very seriously,” he said.

“We take responsibility for our part of the fight against inflation.

“That’s why we’ve been managing the budget responsibly. It’s why we’ve been delivering a couple of surpluses and then much smaller deficits.”

Let’s take another look at whether we’re going to get a fifth interest rate hike by the end of the year.

Etoro analyst Josh Gilbert has pointed out financial markets think it’s more likely than not.

“The board... described the labour market as cooling in line with expectations, so the jump in unemployment to 4.6 per cent won’t be enough to hold them back,” he said.

“With a unanimous vote and a promise to raise rates again if needed, markets now see another hike before the end of the year as more likely than not.

“For households, rate relief feels a long way off for now.

“Wednesday’s monthly inflation figures and the September quarter numbers on October 28 will decide whether November spurs another hike.

“Until inflation shows real signs of cooling, the dreaded ‘higher for longer’ scenario looks like a very real possibility.”

While the RBA board’s statement is bleak reading for borrowers, Harry Murphy Cruise from Oxford Economics says another rate hike before Christmas isn’t a certainty – yet.

“Today’s meeting was less about what the board did (we were confident they’d hike) and more about what they said to give us a steer on future rate moves,” he said.

“The unanimous decision to hike was accompanied by a relatively hawkish statement, outlining upside inflation risks that are now materialising, but also giving the board an out (or at least a pause) by noting uncertainty around the Middle East conflict and a slowing economic outlook.

“We expect the RBA to take a wait-and-see approach from here, with the board taking time to digest the incoming data before a final hike in February.”

We don’t have to wait long to get a key piece of information that will influence that wait-and-see approach: tomorrow, the ABS will release crucial inflation data, which will raise or reduce the chance of another rate hike.

Shadow treasurer Tim Wilson has not held back, calling his federal counterpart “inflation addicted”, a “taxaholic” and “Pyro Jim the inflation arsonist”.

“Jim Chalmers has been playing a game of interest rate chicken with the Reserve Bank,” he said in a statement.

“Today, the RBA blinked, and Australian families and small businesses are the ones who keep getting run over.“

The Coalition has promised to cut government spending, although Labor argues their policy commitments would cost billions.

Pauline Hanson has pointed the finger at Jim Chalmers for today’s rate rise.

“Labor has failed to get inflation under control. Jim Chalmers said rates were coming down,” the One Nation leader said in a statement.

“But today, Australians have been hit with another interest rate rise. Another Labor lie.

“And yet again, Jim Chalmers blames everyone but himself.

“Labor has wrecked our economy and it needs to be fixed. Until then, people need help.”

In a statement, Treasurer Jim Chalmers has doubled down on blaming the global conflict for today’s rate rise.

“Australian workers didn’t choose this war, but they are paying a hefty price for it,” he said.

“The war has been a disaster for the global economy.

“The market is pricing in multiple rate rises in every major advanced economy.“

He will hold a press conference at 3pm, where he will likely be grilled about the government’s hand in the country’s inflation problem.

Macquarie Bank announced, just two minutes after the Reserve Bank’s decision, that it would pass on the rate rise across to customers.

Its variable home loan reference rates will be increased by 0.25 per cent from October 15, and the returns on its saving and transaction accounts will also increase from the same date.

“With the RBA confirming another rate rise, we’re letting our customers know we’ll be lifting our variable home loan rates, as well as the variable rates available on our transaction and savings accounts,” Macquarie Bank head of personal banking Ben Perham said.

“For any customers concerned about making their home loan repayments, we encourage them to get in touch, as financial assistance may be available.”

In its previous rate-hiking cycle, you might recall the RBA didn’t increase rates as sharply as other countries’ central banks, and took a little while longer to start pulling the cash rate lever.

This time, though, it’s going harder than its international counterparts.

“The RBA’s reaction function appears to be shifting,” Vanguard senior economist Dr Grant Feng said.

“Having historically lagged the global interest-rate cycle, the RBA now appears to be adopting a more pre-emptive approach.

“Four rate increases suggest that the bank is increasingly willing to act before a clear deterioration emerges in the activity data, rather than waiting for inflation pressures to become more deeply entrenched.

“Although measures of household and business sentiment have weakened, the RBA remains firmly focused on its price-stability mandate.

“Its priority is clear: to prevent inflation expectations from becoming unanchored and to avoid repeating the experience of 2022, when inflation substantially exceeded expectations.”

We’ve had a few minutes to read through the RBA’s statement outlining its decision.

While it’s quite a short document, it’s chock full of bad news, including a warning that the hiking cycle might not be done yet.

“The board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed,” the statement reads.

“Accordingly, the board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions.”

Before that is some of the reasoning behind today’s decision. In short: exactly what the RBA was worried about at its last meeting is coming true.

“Since the previous meeting, some of the upside risks to inflation are materialising,” the statement reads.

“There have been further disruptions to global oil supply and recent data suggest that growth and inflation in Australia have been higher than expected.

“Higher fuel prices have partially been passed through to prices of other goods and services.

“This inflation impulse is in addition to the effect of capacity pressures in the economy.

“The board remains focused on ensuring that high inflation does not become embedded.”

Unsurprisingly, the RBA’s monetary policy board was unanimous in its decision to raise interest rates.