RBA decision to raise cash rate Australia’s 12th hike in 14 months

Official cash rates rise above 4 per cent as RBA hikes June 2023

The Reserve Bank has lifted its official interest rate to 4.1 per cent, a level not seen since early 2012.

Reserve Bank governor Philip Lowe again sounded a warning about the rising cost of services, such as hospitality, which are labour intensive and vulnerable to rising wages.

"Recent data indicate that the upside risks to the inflation outlook have increased and the board has responded to this," he noted in his post-meeting statement.

"While goods price inflation is slowing, services price inflation is still very high and is proving to be very persistent overseas. Unit labour costs are also rising briskly, with productivity growth remaining subdued."

In particular, Mr Lowe drew attention to last week's slightly bigger than expected rise in minimum and award wages, which was the highest in decades.

"Wages growth has picked up in response to the tight labour market and high inflation," he observed.

Graham Cooke, head of consumer research at Finder, said the decision came as a shock to many.
"The RBA continues to operate in the dark, as our panel of economists are split on the bank's intentions," he said.
"Aussies with an average loan size of $577k will be spending over $15k more per year on their mortgage compared to what they were in April last year.
"That's an additional $1,200 every month – a huge amount of extra money to be forking out on your mortgage."
RateCity.com.au research director Sally Tindall said many Australian households are facing a financial reality few could have forecast when rates were at the historic low of 0.10 per cent in 2022.

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