Reserve Bank lifts cash rate to 1.85pc Ronald Mizen
Aug 2, 2022 – 2.34pm
The Reserve Bank lifted the official interest rate by 0.5 percentage points for a third consecutive month on Tuesday, taking the cash rate to 1.85 per cent, in an attempt to run down rising inflation.
If fully passed on to borrowers, the recent series of rate rises adds $472 to monthly repayments for a typical $500,000 mortgage, $708 for $750,000, and $944 a month for a household with a $1 million loan.
Despite growing criticism, RBA governor Philip Lowe said rising interest rates were necessary to bring inflation back to target and to create a more sustainable balance of demand and supply in the economy.
“The board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path,” Dr Lowe said in his usual post meeting statement.
“The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.”
The latest double “business as usual” increase – the fastest pace of monetary policy tightening in 30 years – comes after Treasurer Jim Chalmers last week forecast inflation to peak at 7.75 per cent later this year.
The pace of inflation accelerated in July, with the Melbourne Institute prices gauge rising 1.2 per cent, the fastest rate in two decades, which stemmed in part from higher energy prices flowing through to household budgets.
Prime Minister Anthony Albanese on Tuesday said helping people deal with the growing cost of living crisis would be central to his jobs and skills summit set to be held at Parliament House in Canberra next month.
