Cash rate heads to 18-year high, but worst inflation may still lie ahead
The Reserve Bank is raising the cash rate to 4.85 per cent, its highest in 18 years, as inflation persists.
Australia's inflation remains stubborn. The Reserve Bank looks set to raise the cash rate to 4.85 per cent this week, tightening the squeeze on borrowers even further.
Treasurer Jim Chalmers acknowledged the pain but defended the government's spending as necessary to help people with the cost of living. The core problem: demand in the economy still outstrips what can be supplied, pushing prices up.
Rate hikes cut demand by making borrowing more expensive. Without a productivity boost, higher rates may need to keep climbing well into 2027 to stamp out inflation.
- 4.85 per cent
- Cash rate target
- 18 years
- Highest level in
- 2022
- Inflation episode began
- Tuesday of this week
- Expected rate rise
Why it mattersEvery rate rise makes mortgages, personal loans, and credit card debt more expensive, directly affecting household budgets and business cash flow.
AustraliaAustralian borrowers face higher repayments on mortgages and loans. Households already struggling with cost-of-living pressures will see this squeeze tighten further.
✓ Claims checked against the source. checked 3 h ago
