RBA Slams Brakes with 15-Year High Interest Rate Hike

The Reserve Bank of Australia (RBA) has raised interest rates to 4.6 per cent, a 15-year high, in an effort to combat rising inflation and slow down the economy. The decision was made despite falling house prices and rising unemployment.

The RBA's benchmark cash rate increased by 0.25 of a percentage point on Tuesday, adding over $90 a month to repayments on a typical $600,000 mortgage with 25 years remaining. Australia now has one of the highest official interest rates among western economies, surpassing the US and UK.

The RBA's governor Michele Bullock warned that inflation expectations have become more entrenched, and that the jobless rate may need to rise as high as 5 per cent to ease pressure on inflation. Higher interest rates will hit a housing market already weakened by higher borrowing costs and federal tax changes.