As the Melbourne Cup was sprinting in full action, the RBA raced to lift the interest rates to combat the ever-persistent inflation. After four consecutive months of maintaining the cash rates at 4.10 per cent the ever-looming presence of another rate rise has finally arrived.
Taking over Phillip Lowes’ position as bearer of bad news Michele Bullock announced that the cash rate target would be increased by 25 basis points to 4.35 per cent to assist in the painful continuous race to control surging costs. Unfortunately for mortgage holders, this pain will be passed onto them as well, with the close follow up by three of the four major banks, announcing increases to their interest rates as well. News to be expected yet greatly disliked for households who have seen thirteen rate rises by the RBA since the start of 2022.
With inflation pressures remaining too high for comfort, its continuity has been a crushing issue on the average Australians. Although arguably past the point of speeding out of control it is still the front running in the current cost-of-living crisis predicament that has become an uncomfortable normality. As stated in the RBA’s media statement “high inflation weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment”, all factors of an overheated economy that needs cooling down.
The question now is whether this is enough to slow down cost pressures or will it just be a redundant act as it compete with the potentially harmful global supply chain issues caused by the Israel – Gaza (Palestine) conflict.