RBA interest rates live updates: Reserve Bank of Australia hikes rate to 4.85% in blow to mortgage holders – latest news | Reserve Bank of Australia
Michele Bullock addresses media following rate hike decision
Jonathan Barrett
The RBA governor, Michele Bullock, says “this is not the news that many Australians want to hear, but it is what’s needed to get inflation down”.
She says “some pain now will prevent even worse pain down the track”.
I understand that today’s decision is going to be difficult for Australians with mortgages, many of whom are already managing large repayments.
But households with mortgages are not the only Australians doing it tough. Every household is dealing with higher prices for groceries, electricity, insurance, and other essentials.
High inflation is particularly painful for Australians on lower incomes, including people who rent and have little or no savings to fall back on.
The comments were made in opening remarks to journalists in Sydney ahead of questions.
Key events
Jonathan Barrett
RBA independence from government ‘a two-way street’, Bullock says
Bullock has described independence as a “two-way street”, noting that she doesn’t tell the government what to spend on, and that the government doesn’t tell the RBA what to do with rates.
The role of public sector spending in fuelling inflation looms large, with Labor under pressure from critics over five rate hikes this year.
Bullock says that governments need to decide on how much spending is required to provide for the nation. She says:
But that is for governments to decide. Independence is a two-way street. I don’t tell them what to do with fiscal policy. They don’t tell me what to do with interest rates.
Jonathan Barrett
Unemployment and housing concerns behind board split: RBA governor
More from Michele Bullock’s press conference:
The RBA decision to raise rates was split, with three members of the rate-setting board preferring a hold, while six voted to raise.
Bullock says those in favour of a hold were concerned about risks to the economy, including rising unemployment and housing weakness. Bullock said:
They felt that there were potential downside risks in these circumstances, particularly since we’d already done four interest rate rises, and maybe we should wait a bit longer to get some more data to test that.
Bullock says market watchers shouldn’t interpret the split decision as a sign the RBA won’t raise further if inflation risks materialise.
Michele Bullock addresses media following rate hike decision
Jonathan Barrett
The RBA governor, Michele Bullock, says “this is not the news that many Australians want to hear, but it is what’s needed to get inflation down”.
She says “some pain now will prevent even worse pain down the track”.
I understand that today’s decision is going to be difficult for Australians with mortgages, many of whom are already managing large repayments.
But households with mortgages are not the only Australians doing it tough. Every household is dealing with higher prices for groceries, electricity, insurance, and other essentials.
High inflation is particularly painful for Australians on lower incomes, including people who rent and have little or no savings to fall back on.
The comments were made in opening remarks to journalists in Sydney ahead of questions.
Jonathan Barrett
Economists intrepret RBA’s decision
Several economists are interpreting the RBA’s statement accompanying the rate hike as “dovish”, which means further hikes are less likely.
UBS economists describe the decision as “clearly dovish” while Anthony Malouf, economist at Ebury, says there is an “absence of a clear tightening bias”.
The Australian dollar also immediately dropped against its US counterpart after the decision, which shows traders do not believe the central bank is, at this stage, looking to hike much further.
This could all change if inflation remains elevated, but for the moment, some economists and currency traders believe this could be the last hike, at least for a while.
Chalmers plays down role of federal budget on inflation
Chalmers was asked about the federal budget and its impact on inflation. He said:
Our budgets are not what’s putting upward pressure on inflation. But we can play a helpful role and that’s what we intend to do.
He was also asked if he’d consider stepping aside.
“No,” the treasurer said.
Chalmers says rate hike will be ‘difficult news’ for Australians already paying ‘hefty price’
Jim Chalmers, the treasurer, is speaking now after the RBA’s decision. He said:
Today’s decision was widely expected, but that doesn’t make it any easier for Australian families and businesses to absorb. It will be difficult news for many Australians who are already paying a hefty price for circumstances outside of their control.
He pointed to the ongoing war in the Middle East as a major factor in inflation:
The war’s in its ninth month and its re-escalation is putting sustained upward pressure on inflation.
It’s weighing on growth and its end can’t come soon enough for the global economy or for Australians facing cost of living pressures.
Macquarie Bank announces it will pass rate rise on
Macquarie Bank has already announced it will pass on the interest rate rise to mortgage holders.
The bank said it will increase variable home loans by 0.25%, effective 19 November. It will also increase ongoing variable rates paid on its transactions and savings accounts by 0.25%, a boon to savers. Ben Perham, the head of personal banking, said:
With household budgets already feeling the strain, today’s decision by the RBA will be challenging for many Australians.
To help our variable home loan customers prepare, we’re again waiting more than two weeks before this latest increase takes effect.
The cash rate is now the highest it has been in 18 years
RBA board split on decision to raise cash rate
The decision was not a unanimous one: six members of the RBA board voted to raise the cash rate, while three voted to leave it unchanged.
The RBA said in a media release:
The Board is conscious of the period in which inflation has been too high. Given the revised inflation outlook and the continuing upside risks, the Board judged that a further tightening in financial conditions is warranted to support the return of inflation to target.
The Board will continue to do what it considers necessary to bring inflation sustainably back to target.
Reserve Bank raises interest rates to 4.85%
Patrick Commins
The Reserve Bank has hiked rates for the fifth time this year, from 4.6% to 4.85%, in a bid to regain control of surging inflation amid the ongoing global oil shock triggered by the war in the Middle East.
The RBA’s decision to hit mortgage holders again comes as no surprise after inflation jumped to 4.3% in the year to September, and following tough talk from senior central bank officials over recent days and weeks.
The RBA’s cash rate has now reached its highest level since 2008.
Back-to-back hikes will heap more pain on over 3.3m households with home loans, and turn the screws on a federal government under pressure for its economic management.
The latest increase will lift the monthly interest payment on a $700,000 home loan by $107, according to Canstar, bringing the total rise in repayments over this year’s five hikes to $532.
Jim Chalmers, the treasurer, said prior to the announcement that “people are under substantial pressure already”, adding that higher borrowing costs would “make things much harder”.
RBA rate decision coming at 2.30pm
We’ll have news for you in about 15 minutes.
Jonathan Barrett
CBA forecasts home prices to fall by 14%
Australia’s biggest lender, Commonwealth Bank, now expects national dwelling prices to suffer a peak-to-trough fall of about 14% amid souring economic conditions.
The bank, which had previously forecast prices to fall by 9%, revised its forecasts today ahead of what is expected to be the fifth interest rate rise this year.
CBA senior economist Trent Saunders said the price downturn had accelerated to capture mid-sized state capitals Brisbane and Perth.
Saunders expects prices to stabilise late next year.
The revised outlook aligns with CBA’s updated economic forecasts, which warn that the prolonged conflict in the Middle East is helping trigger a “sharper, longer slowdown”.
While most economists had anticipated low double-digit falls in Australian property prices, several now expect peak-to-trough drops of about 15%.
Patrick Commins
‘Sharper, longer slowdown’ predicted for Australian economy as fifth interest rate hike looms
Australia’s economy is set for a “sharper, longer slowdown”, major bank economists say, as the Reserve Bank is forced to keep interest rates higher to rid the nation of persistent inflationary pressures.
The RBA is widely expected to hit mortgage holders with a fifth rate hike on Tuesday, in a move that will push the cash rate to its highest since 2008 amid rising worries the economy could even be tipped into recession.
Belinda Allen, the head of Australian economics at CBA, said the extended Middle East conflict, collapsing house prices and a more aggressive central bank would drive real GDP down to just 1% by the middle of next year, nearly half the previous estimate of 1.8%.
Growth through 2027 would be barely stronger at an estimated 1.1%, according to the updated projections.
Read more here:
How would your mortgage change?
For someone with an average-sized new mortgage of $731,000, paying a typical rate of 6.2%, a 0.25 percentage point rate increase would add about $119 to their $4,596 monthly repayments.
Use our loan calculator to check how a rate rise may affect you:
Tess Ikonomou
NSW premier warns of risk of ‘stopping the economy dead’
The NSW premier, Chris Minns, rejected commentary from some economists that the RBA’s decision would be straightforward.
I know they’ve got a just difficult decision to make. I accept that, but we’ve got to be careful that in their efforts to slow down the economy, they don’t stop it dead.
This is an extra hit to a pay packet that many people haven’t budgeted for, are not ready for. It’s going to have a massive impact on our economy.
Minns said a rate hike would have a “disproportionate impact” on the state’s economy due to NSW’s high house prices.
Tess Ikonomou
Anthony Albanese defended his government’s record in the face of a likely rate hike.
The prime minister is in Saint John’s, Antigua and Barbuda, for the Commonwealth heads of government meeting at the request of King Charles.
He has faced some criticism for being out of the country during the decision.
We work each and every day on cost of living.
What I recognise as well is that by engaging in the world, we can deal with our national security interests, but also make our economy stronger. That’s why we need to engage in the world.
Tess Ikonomou
Chalmers flags more ‘savings’ in next federal budget
Asked why Labor can’t guarantee it won’t find net savings in the mid-year budget update, Jim Chalmers told RN the government is undertaking that task this month ahead of December’s release.
We are currently working our way through the spending pressures, the economic forecasts, and the savings options to come up with the best, most responsible budget update that we can.
There have been savings in all eight of our budget updates so far. There’ll be savings in the ninth as well.
The powerful expenditure review committee met on Monday, and will convene again on Wednesday to discuss savings, Chalmers said.
Chalmers says Australians bracing for ‘difficult decision’
Tess Ikonomou
The treasurer, Jim Chalmers, told ABC’s RN Australians are bracing for a “difficult decision” ahead of an expected rate hike.
Another rise would likely increase the cash rate to 4.85%, taking it to the highest level in 18 years.
People are under substantial pressure already, and obviously, if rates go up today, that will make things much harder, especially when there are already a number of rate rises in the system and their full effect hasn’t been felt yet.
Regardless of the decision that the Reserve Bank takes independently this afternoon, we know that there is more work to do to make the budget as tight as it can be.
Welcome
Welcome to Guardian Australia’s live coverage of the Reserve Bank’s Tuesday board meeting.
It is widely expected the central bank will hike interest rates by 0.25 percentage points today to 4.85% – the fifth rate hike this year, and the highest level in 18 years.
Let’s begin.
