Interest rates up to 2.60%

David Considine

4 October 2022

The Reserve Bank of Australia (RBA) has delivered a further 0.25% rate rise today, 4 October 2022, with the official cash rate now reaching 2.60%.

Speaking of the move, RBA governor Philip Lowe said: "The board is committed to returning inflation to the 2–3 % range over time. Today’s increase in interest rates will help achieve this goal and further increases are likely to be required over the period ahead. The cash rate has been increased substantially in a short period of time.”

The October announcement follows on from 0.50% hikes in June, July, August and September, but economists were split as to exactly what would transpire. Economists from Australia’s big four banks largely forecast up to a 0.50% increase this month — which would have made it an incredible 2.75% of tightening in just five months, over six meetings. The move continues the central bank’s rate hiking cycle, which started in May (and continued with larger rate hikes more recently) as it attempts to curb rising inflation. Most economists had agreed on a .50% rise, but some suggested that local conditions still could have enabled a lesser 0.25% hike.

Mr Lowe continued, "Reflecting this, the board decided to increase the cash rate by 0.25% this month as it assesses the outlook for inflation and economic growth in Australia. This means for many people to meet refinancing criteria, they must be able to meet repayments around 5-7% – and likely higher after today - above the rate at which they were approved when they took out their current mortgage. Depending on the amount of the loan, this can equate to more than $2,000 per month higher.”

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