The Reserve Bank of Australia (RBA) has once again increased the official cash rate by 0.25% to 3.35%.
In Australia, CPI inflation over the year to the December quarter was 7.8%, the highest since 1990, with underlying inflation higher than expected.
The Australian economy grew strongly over 2022 and the labour market remains tight at 3.5% unemployment, however economic growth is expected to slow in 2023 and unemployment is expected to increase.
The RBA Board recognises "that monetary policy operates with a lag and that the full effect of the cumulative increase in interest rates is yet to be felt in mortgage payments. There is uncertainty around the timing and extent of the expected slowdown in household spending. Some households have substantial savings buffers, but others are experiencing a painful squeeze on their budgets due to higher interest rates and the increase in the cost of living."
Philip Lowe outlines, the RBA Board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.
Yesterday's increase was the ninth consecutive rate rise since May 2022, meaning that households are spending significantly more on home loan interest. The table below outlines the difference between May 2022 and February 2023.
*The lowest New Home Loan Variable Rate available today is 5.09%.
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General advice warning
The information provided is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.