RBA Rate Hike Pain Expected to Hit Australian Economy

Reserve Bank of Australia (RBA) deputy governor Andrew Hauser has warned that the central bank will not tolerate inflation above target for a prolonged period, prompting fears of an imminent recession.

The big four banks and most economists are expecting another interest rate hike either later this month or on Melbourne Cup day, with respected finance commentator Alan Kohler warning that could send Australia's already fragile economy over the edge.

What all this means is that if there's a rate hike in September, as the market now thinks there will be, odds of about 72 per cent, then it's very likely to be a recession because the sentiment is so negative, Mr Kohler said.

The RBA's three hikes in February, March and May have already added $354 to monthly repayments and another hike would mean borrowers with a new loan would be paying $475 more than they did at the start of this year.