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The Reserve Bank has increased interest rates for the sixth consecutive month but has opted for a smaller increase this time.
Analysts were expecting an 0.5 rise, but the Board of the Reserve Bank announced a 0.25-point rise, taking the cash rate to 2.6 per cent.
Bank governor, Philip Lowe, said further rate increases are likely.
“Today’s further increase in interest rates will help achieve a more sustainable balance of demand and supply in the Australian economy.
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“This is necessary to bring inflation back down.
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"It is closely monitoring the global economy, household spending and wage and price-setting behaviour.
“The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”
The increase means a borrower with a 25-year $500,000 mortgage will pay an extra $74 a month in repayments.
Federal Treasurer, Jim Chalmers, said the cash rate increase will be difficult for many households, even though it was smaller than expected.
Main points
- Interest rate to rise 0.25 percentage points
- RBA says further rises will be needed to control inflation
- Increase adds $74 a month to cost of 25-year $500K loan
