Decision is the fourth monthly rise in a row, as Australia’s inflation rate soars beyond target range of 2-3%
For an owner-occupier with a $500,000 variable rate mortgage and 25 years to go, a 50 basis-point increase in the lending rate would add about $140 in monthly repayments, according to RateCity. The increases since May would lift monthly repayments by $472, assuming the commercial banks pass on the whole increase.by this December. Inflation will not drop back into the RBA’s target range of 2-3% until the year ending in June 2024, the treasurer predicts.
The RBA is scheduled to release its own forecasts on Friday with the release of the quarterly statement on monetary policy. In his accompanying comments, Philip Lowe, the RBA governor, hinted that the rate rises to come are not yet set in stone. “Today’s increase in interest rates is a further step in the normalisation of monetary conditions in Australia,” Lowe said. “The increase in interest rates over recent months has been required to bring inflation back to [the 2-3%] target and to create a more sustainable balance of demand and supply in the“The Board expects to take further steps in the process of normalising monetary conditions over the months ahead,” Lowe said, but added, “it is not on a pre-set path.
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