RBA's Bullock warns of recession feel at 4.85%
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Key points
- The Reserve Bank of Australia lifted the cash rate by 0.25 percentage points to an 18-year high of 4.85%.
- Markets reduced bets on further rate increases after three policy board members voted against the decision.
- The central bank raised rates to cool domestic capacity pressures and bring forecast 4.5% headline inflation down.
The Reserve Bank of Australia raised the cash rate by 0.25 percentage points to 4.85%.
This fifth increase of the year brings benchmark interest rates to an 18-year high as central bank officials work to curb persistent inflation.
“It is going to make people feel like it’s a recession because they feel poorer,” said RBA Governor Michele Bullock.
The rate increase will raise average variable mortgage rates to 6.75%, pushing typical household repayment costs to 37.4% of income.
The central bank projected headline inflation to reach 4.5% by the end of the year while economic growth slows to 1.6%.
Official staff updates also project the national unemployment rate will rise from the current 4.7% to 5.1% by December 2028.
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