RBA interest rates: Reserve Bank raises official cash rate to 4.1% in blow to mortgage holders

RBA interest rates: Reserve Bank raises official cash rate to 4.1% in blow to mortgage holders Reserve Bank of Australia’s second consecutive increase lifts cash rate target to where it was in February last year Follow our Australia news live blog for latest updates Get our breaking news email , free app or daily news podcast The Reserve Bank has increased interest rates amid a global energy shock that threatens to push Australian inflation towards 5% in a split decision, leaving the door open to further hikes. The hike takes the RBA’s cash rate target from 3.85% to 4.1%, back to where it was in February 2025, wiping out the relief offered by two cuts last year. Five members of the bank’s monetary policy board voted to raise interest rates while four voted to hold, marking the RBA’s narrowest call since it began disclosing votes in July. Household budgets, already under pressure after a rate rise in February and soaring petrol prices, will face higher mortgage costs. A household with a $600,000, 25-year mortgage – approximately the average size of a new mortgage – will see their weekly repayments rise by another $91 a month, once their bank passes the hike on. The broadening Middle East conflict has triggered fears of fuel shortages and is adding to price pressures around the world, forcing global central banks to prepare for higher interest rates. Australia’s Reserve Bank had been the only one expected to hike so soon, with central banks in the US, UK, European Union, Japan, Canada, Switzerland and Sweden all expected to leave rates on hold this week. Even before the US struck Iran, Australian inflation had already been elevated at 3.8% – well above the bank’s 2-3% target. In a statement accompanying the decision, the RBA board said inflation could stay higher for longer than previously expected as the jobs market and economy more broadly were now running hotter than the bank had realised. “The Board judged that inflation is likely to remain above target for some t...