RBA Rate Hike Puts Pressure on Labor Over Inflation

The Reserve Bank of Australia (RBA) has raised interest rates for the fourth time this year, putting pressure on the Labor government to tackle inflation. The cash rate is now at its highest level in 15 years, at 4.6 per cent.

Treasurer Jim Chalmers attributed higher prices in Australia to international factors, including the ongoing Iran conflict and AI investment boom. However, RBA Governor Michelle Bullock said that while these factors have contributed to inflation, they are not the only cause.

Bullock emphasized that domestic capacity pressures, particularly excess demand, had been driving inflation before the oil shock. She noted that the economy was already experiencing high demand and that the oil shock has made things worse.

The RBA's decision is expected to increase mortgage repayments for home owners, with a typical 25-year loan on a $600,000 mortgage set to rise by about $91 per month.