AS IT HAPPENED: Reserve Bank announces rate hike; Governor not sure if tightening cycle has begun; Economists tip future increases; Treasurer insists government spending isn't behind inflation spike

With Michele Bullock's press conference done, we're going to wrap up our live blog. Here's what happened today.

As expected, the Reserve Bank increased interest rates by 25 basis points, raising the official cash rate to 3.85 per cent.

The central bank also updated its economic forecasts, which didn't bode well: inflation isn't predicted to come back into the 2 to 3 per cent target band until June 2027, while core inflation isn't tipped to reach the middle of that range for a further year.

Some economists are now tipping further hikes this year, while the market is pricing in an 80 per cent chance of a raise by May.

Despite that, Governor Michele Bullock – who is famously averse to giving forward guidance about interest rates – seemed genuinely unsure about what her bank's next move will be.

"It is not the same as the tightening cycle when we were coming out of COVID, when we were coming from 0.1 per cent cash rate; it was quite clear that we had to go up and we had to go up quickly," she said.

"This isn't as clear."

While the federal government has faced criticism over the role its spending played in increasing inflation, the RBA's Statement on Monetary Policy downplayed its influence, saying instead that a surge in private demand has come as a surprise.

Today's hike will add around $100 to an average mortgage holder's monthly repayments, although many borrowers have a buffer built up thanks to last year's three cuts.

Thanks for following along with our coverage of today's interest rate decision, and remember to stay tuned to 9news.com.au and nine.com.au for all the latest news.

More than two hours after the RBA's official interest rates decision, we're yet to get any announcements from the major banks passing on the hike to customers.

Typically these statements come out within a few hours of the RBA's decision, and banks are expected to pass on higher rates, so it'll be one to keep an eye on for the rest of today and into the week.

Bullock has now wrapped up her press conference.

As you'd expect, lots of questions about whether there are more rate hikes on the way and no clear answers – but some genuine uncertainty about the path forward.

After that last question, Bullock provided a bit of insight into why she's so reluctant to hand out forward guidance (not including the obvious point of wanting to avoid the same infamous misstep of her predecessor, Philip Lowe, who suggested the cash rate would remain low until 2024, only for a string of 13 hikes to begin in May 2022).

"I understand that it adds uncertainty for people, but as you also know I am very wary of giving forward guidance because people don't take the forward guidance in the way it is meant," she says.

"They have tended to take it literally, and so I don't like to give forward guidance.

"And I understand the uncertainty but we live actually, quite frankly, in a very uncertain world at the moment.

"We don't know if we wake up in tomorrow morning what might have gone on in the rest of the world which might have completely thrown everything out."

While she hasn't mentioned anyone by name or position there, it doesn't take too much imagination to figure out which world figure is causing a decent chunk of that uncertainty.

Think: White House.

Some fascinatingly frank comments from Bullock now, as she's asked whether Australia has just entered a new tightening cycle – that is, whether there is a string of hikes on the way.

She's very hesitant to say either way.

"I would say I don't know if it is in a cycle," she replies, after much umming and ahhing.

"Certainly it is an adjustment and we are waiting…

"It is not the same as the tightening cycle when we were coming out of COVID, when we were coming from 0.1 per cent cash rate; it was quite clear that we had to go up and we

had to go up quickly. This isn't as clear."

Bullock has been asked if she can "square the circle" about many Australians still struggling with the cost of living at the same time as the economy is running so hot that it's forced today's rate hike.

"It's always true that there are different experiences across the population and some people are doing it tougher," she says.

"That might be people, for example, with mortgages on lower income, perhaps, who have got less spare income. And there's other people who are not going to feel it quite as much.

"What we know is there a large chunk of people with mortgages that, as interest rates have come down, have opted, in fact, to save it.

"They are not spending it, they're socking it away.

"So there are different experiences…

"My only thing I would say to people who are badly affected by this and are struggling to make ends meet is that part of the reason they are struggling to make ends meet – not just people with mortgages, renters are often struggling as well – inflation is what's caused them lots of trouble.

"The price level has gone up 20 to 25 per cent over the last few years."

Bullock was asked if a 50-basis-point rate hike was discussed at today's meeting.

She was quick to say that wasn't on the cards.

She was then asked about the financial market pricing in an 80 per cent chance of another hike in May.

"I don't dismiss market expectations, but I'm also not driven by them," Bullock said.

"The board will monitor and make its own decisions about what's appropriate and the market is taking a view on that which is fine, but I won't basically be driven by the market."

These press conferences often turn into a game of cat and mouse, where reporters try to get Bullock to say – or even hint at – whether the RBA will make further changes to the cash, and she replies by refusing to provide any forward guidance.

Today is no different.

Bullock has faced several questions effectively asking whether there will be another rate hike. True to form, she says she's not ruling anything in or out.

"More versions on the same question," she says to question number four or five (I've lost count).

"I'm not sure what I can add other than say that the board has taken a cautious approach...

"I'm not predicting there'll be more rate rises but I'm also not saying that if inflation does remain too high, that there mightn't be."

Bullock says she understands why borrowers are unhappy with today's decision, but has warned that high interest rates are far better for everyone than persistently high inflation.

This was a key message from the governor during the last hiking cycle.

"What's also not great for… anyone is if inflation remains elevated because every time they go to the shop – every time they go to buy their groceries, every time they go to get personal services, medical – if inflation is high, that's going to keep going up.

"Ultimately, it is best if we get inflation under control and our instrument is the interest rate and I understand that people with mortgages find that hard, but the alternative is potentially even harder."

The first question for Bullock is – as expected – about government spending, but she's not biting on that one.

"Over the last six month or so that private demand has turned out to be much stronger than we had been forecasting," she says.

"I'm not going to comment on fiscal policy because it's an independent policy," she adds.

"The government – governments, I should say, because there's state and federal government here – governments have to supply services, they have to supply goods to people, they have to build infrastructure, they have to make those policy decisions.

"We take that as given and together with private demand, look at whether or not it means that inflation is going to be under upward pressure or not.

"That's our focus."