Australia's Economy Faces 'Devastating' Interest Rate Hike

The Australian government is attempting to reassure consumers that better economic times are ahead. Deputy Prime Minister Richard Marles says there will be 'light at the end of the tunnel' for inflation, which has risen due to high fuel prices.

The conflict in the Middle East has driven up oil and fuel costs, leading to a predicted rise in inflation from 3.5% to 4%. The Reserve Bank of Australia is expected to raise interest rates on Tuesday, reaching a near-15-year high of 4.6%.

Mortgage holders are bracing for the rate hike, which has been largely seen as inevitable by money markets. Marles attributes the rising inflation to internationally driven circumstances, rather than domestic policies. He also points out that Australia's economy is in a good position due to low debt compared to other countries.

Labor senator James Paterson disagrees with this assessment, saying government spending is driving up inflation and forcing the Reserve Bank's hand. He predicts that higher interest rates will be 'devastating' for Australians.