RBA interest rates live updates: Michele Bullock’s board hikes to 15-year high to rein in inflation

Bullock concedes there’s no other tool to get inflation down other than higher interest rates.

“People are feeling quite rightly very annoyed and very upset about the fact that the costs of everything are rising, that their wages are not keeping pace with that,” she said.

“They’re seeing wage, real wage cuts, and then on top of that, they’ve got this shock from the Middle East, which has nothing to do with them, but it’s made us all poorer.

“This is true. So I understand all those sentiments.

“The best thing we can do is get that inflation rate back down to 2.5 per cent, where it sits in the background. People are not worrying about it, and when we can get to that point, then and hopefully, if we get some productivity growth, then we’ll be able to grow, and we will be able to get some real wage rises.

So, you know, I get it. I understand. I know why everyone is really annoyed with this situation. Some of it is coming from offshore. Some of it is domestic demand-driven. It’s just that we are consuming more than we can supply as an economy.

“I understand why the people who are impacted by this very directly in terms of loans feel that they are carrying the burden, but actually, the interest rate increase gets into all sorts of cracks,” Bullock said.

“The other point I would make here too is that we know monetary policy works overseas, and many overseas countries do not have this cash rate channel in the same direction, in the same way we do, because they don’t have a predominance of variable rate mortgages.

“But interest rate rises still work, and they work because there’s these other channels through which interest rates impact the economy.

“People don’t see those things, but they’re the sorts of mechanisms through which ultimately we can bring demand down.”

And, says Bullock, it’s mad eus all poorer.

“That is a fact,” she said.

“You will all recall that when the Middle East conflict first started, everyone was sort of thinking, ‘Oh, it’ll probably not last very long’. Well, that’s clearly not true. It’s lasted, and there doesn’t seem to be any end to it.

“That means that fuel prices, fertilizer prices, transport prices - all these things now are permanently higher. So this idea that they would go up and then come down again just hasn’t happened.

“The challenge with that is that the longer it lasts, if businesses were thinking, ‘Oh look, it’ll come off. I won’t pass on costs’, the longer it goes, the more likely it is that businesses will just try to pass through the cost increases.

“Now, will they be able to? If they’re in industries, for example, where there’s excess demand, they might be able to pass it on, right? So, I think it’s not the only reason for the decision today.

“I want to make that clear. This isn’t all about the Middle East conflict. It is making things much worse, but we did start from a position of excess demand anyway, and that’s why we started raising interest rates even before the conflict started.”

Bullock says interest rate hikes take time to work into the economy.

With a new inflation read out tomorrow, Bullock also reminded reporters that reading would be from a month ago.

“We raised interest rates three times earlier in the year,” she said.

“A lot of that effect is still to flow through. This is one more, and so what we are predicting, what is hoped here is that this will be restrictive enough; those four interest rate increases to bring things down.

“Now, will it be enough? I don’t know. I’m not going to give you forward guidance, but all I can say is that the number that comes out tomorrow, unfortunately tomorrow, is one part of the information about where we were, what’s of interest to us is where we’re going to be.

“That’s the important thing, and how much the tightness in financial conditions are going to deliver that.”

The board only considered a hold or a 25-point basis increase in its unanimous call to lift the cash rate to 4.6 per cent.

“The bottom line is that productivity is doing nothing, and I know we talk about productivity a lot, but it’s so important if we want the economy to be able to grow and create jobs,” Ms Bullock said.

She noted the unemployment market was still quite low historically, “and we still think the labor market is a little bit tight”.

It’s the same message we’ve heard since the RBA started raising rates earlier this year.

“Today’s increase in interest rates is needed to slow the economy and return inflation to target,” governor Michelle Bullock told the media after today’s decision to lift rates.

“Now, I know this decision is difficult for households with a mortgage and businesses with loans, but high inflation hurts all Australians, especially the most vulnerable.

“Every household has seen how the price of everything has gone up in recent years.

“Pay packets don’t go as far as they used to, and that’s why we need to stop this high inflation.

“It’s critical that we stop expectations for high inflation from becoming embedded in price-setting decisions across the economy, or the problem will only get worse.

“That’s why bringing inflation down is our priority. The board will raise increased interest rates again if that’s what’s needed to get inflation down.”

The governor of the RBA, Michelle Bulock is minutes away from her post-call presser.

Stay tuned for what she has to say ...

Compare the Market’s economic director David Koch says today’s announcement is a heavy blow to a group of Australian households already under strain.

He said average monthly repayments on an average $731,000 loan are now sitting around $4502.

Compared to five years ago, when the average loan was $548,000 and the average variable interest rate was 2.8 per cent, monthly repayments were just $2252.

Mr Koch said median monthly earnings for a full-time worker were $6443 in August 2025, around $1100 more than in August 2021.

That suggests wage growth has at least partially closed the gap for those now forced to pay more on their mortgage, particularly for dual-income households.

But that doesn’t ease the pain.

“Yet another gut punch for Aussie families with a mortgage,” Mr Koch said.

“Where are people meant to find an extra $5500 a year? And that’s after tax. On top of that, households are getting hit at the petrol pump and again at the supermarket.

“Rates are higher, loans are bigger, and we have a whole generation of mortgage payers who have never seen rates this high.

“We can’t keep asking the same group of people to keep tightening their belts when there are forces pulling in the opposite direction.”

Federal Treasurer Jim Chalmer was at pains to remind households hit with a fourth rate rise in 2026 that the RBA is “independent” while also pointing the finger at the war between the US and Iran.

Just minutes after the central bank pushed the cash rate to 4.6 per cent, Dr Chalmers said the conflict was pushing up inflation and interest rates all around the world, “but that doesn’t make it any easier for Australians”.

“Australian workers didn’t choose this war, but they are paying a hefty price for it,” he said.

“The war has been a disaster for the global economy.

“The market is pricing in multiple rate rises in every major advanced economy.

“While today’s decision was widely expected and anticipated, that doesn’t make it any easier.

“As the RBA’s statement made clear, the conflict in the Middle East is broadening and pushing up energy prices and inflation around the world.”