By Shane Rodgers
Struggling families are facing more pain after the Reserve Bank (RBA) again increased interest rates after continually failing to bring inflation under control.
The decision will add pressure on the Federal Government to adopt anti-inflation policies and not expect households to do all of the economic heavy lifting.
The RBA announced today that it was increasing the cash rate by 25 basis points to 4.85 percent.
It is the fifth rise this year and takes rates to their highest level in 18 years.
The Board was split on the decision, with six members voting for the increase and three wanting to leave the rate at 4.6 percent.
The decision came on the same week that the Cotality group said that house prices were falling quicker than at any time in 40 years.
The decision will also put further pressure on employment, which was at a five year high of 4.7 percent in September 2026.
In a statement, the RBA said inflation remained elevated and recent data indicated that it was “broadly based”.
“The inflation outlook has also been revised materially higher in the updated staff forecasts,” it said.
“This partly reflects higher fuel and other commodity prices affected by the conflict in the Middle East.
“But domestic capacity pressures are also judged to have been a little tighter than earlier thought. AI-related investment is driving rapid growth in prices for technology-related goods, and inflation in many goods and services remains high.”
Data also suggested many firms were experiencing cost pressures and “are either increasing the prices of their goods and services in response or looking to do so”.
“Inflation is now forecast to remain elevated through much of 2027 and is not expected to reach the top of the 2–3 per cent target range until late 2027, around three quarters later than previously forecast,” the RBA said.
“This presents upside risks to inflation expectations; some measures are assessed to have risen lately.”
The full statement is here
