Next year will feel like a recession, RBA warns as rates hit 4.85%
The Reserve Bank raised interest rates to 4.85%, its fifth hike this year, as the government prepares fresh spending cuts.
The Reserve Bank has lifted interest rates to 4.85%, the highest in 18 years, adding to the squeeze on household budgets across Australia. It's the fifth rate rise in 2026.
Governor Michele Bullock warned that economic conditions will make 2027 feel like a recession for many Australians. "People feel poorer, their spending can't grow very quickly because their incomes aren't growing very quickly," she said.
The federal government is preparing a new savings package to tackle inflation, which will be announced as part of December's economic update. Housing Minister Clare O'Neil acknowledged families are exhausted after years of financial pressure and said cuts must be careful not to harm essential services like Medicare and aged care.
- 4.85%
- Interest rate
- 18 years
- Highest in
- 5
- Rate hikes in 2026
Why it mattersHigher rates mean bigger mortgage payments and rising costs for borrowing, while spending cuts may affect services Australians rely on.
AustraliaAustralian households already struggling with cost-of-living pressures now face higher loan repayments and potential cuts to government services before the end of the year.
Corroborated by7news.com.au
✓ Claims checked against the source. checked 2 h ago
