26 September 2023

‘Every chance’ RBA will hike interest rates again

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Eliza Bavin* says the most recent cost-of-living figures suggest more needs to be done by the RBA to tame inflation.

The Reserve Bank (RBA) could deliver a further 0.25 per cent interest rate hike, potentially as early as next Tuesday, after the recent figures confirmed inflation remained stubbornly high.

In a mixed bag of results, the monthly Consumer Price Index (CPI) figures showed annual inflation increased from 6.3 per cent in March to 6.8 per cent in April.

While the rise was largely driven by the halving of the fuel excise a year ago, categories such as rent and travel remained higher.

What would another RBA hike cost?

If the RBA does increase the cash rate to 4.10 per cent, either on Tuesday or in the coming months, it will take it to the highest rate since the April 2012 meeting.

RateCity.com.au analysis showed another 0.25 per cent rise would mean the average borrower – with a $500,000 loan before the hikes started in May last year – could soon be paying a total of $1,134 more a month.

That’s a 49 per cent increase.

More ‘tough months’ ahead

RateCity.com.au research director Sally Tindall said a lot of households were hoping there would be a light at the end of the tunnel sometime soon.

“These inflation figures suggest there are many more tough months ahead for Australian families battling with the soaring cost of living and rising rates,” Tindall said.

“Inflation in Australia has remained stubbornly high in some categories, and there’s every chance the RBA will hike rates again, as early as next Tuesday, to stay firm on its course.

“Borrowers should plan for one, if not two more rate hikes over the coming months.

“Call your bank and ask what your repayments would be if the cash rate gets to 4.35 per cent, and start planning out a new budget around these figures.”

*Eliza Bavin, Personal Finance Editor, is a senior journalist focusing on economics, personal finance and company news amongst other things.

This article first appeared at au.finance.yahoo.com

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