RBA interest rates live updates: Reserve Bank set to hike again as war lights fire under already-hot inflation

Look away now if you answered ‘yes’ to that question.

A former RBA official warns the Reserve Bank could raise rates three more times this year, taking mortgage borrowing to the highest level since 2008,

The annual headline inflation rate of 4.6 per cent in March - the first full month of the Middle East conflict - is well above the central bank’s 2-3 per cent target.

Former RBA senior research manager Peter Tulip said the danger of higher inflation feeding into higher wages meant the central bank was more likely to hike rates three more times, to an 18-year high of 4.85 per cent, by the end of 2026.

This would add more than $350 to monthly repayments on an average, new mortgage.

“Most of the increase in inflation is temporary but not all of it and the risks of inflation being above the RBA’s target seem much, much greater than the risk of inflation being below,” Dr Tulip said.

“The chances of prices feeding into higher wages are a sufficient worry to make the bank cautious in its monetary policy.”

Read more here.

Remember the relief you felt when the RBA announced those three interest rate cust last year?

The benefits of those were just starting to flow through to household budget when the central bank changed course and resume tightening the purse strings.

This graph says it all ...

Rising fuel prices caused by the US-Israeli war with Iran have amplified the central bank’s inflation headache.

Price growth was already well above target before the conflict broke out and sent global energy markets into chaos.

Economists at the Commonwealth Bank, NAB, ANZ, Westpac, AMP, Deutsche Bank, Challenger, JP Morgan, HSBC and Citi all predict Reserve Bank governor Michele Bullock to announce a hike.

For an average borrower with a $600,000 mortgage, the three consecutive hikes since February will cumulatively add more than $270 a month in interest repayments.

Citi economists Faraz Syed and Josh Williamson expect the board to be less split than in the March meeting, when only five of the nine members voted in favour of a hike.

For now, spending has remained resilient despite the oil shock, according to Commonwealth Bank payments data.

Although spending growth is expected to soften through the rest of 2026, there are no signs the recent sharp pullback in sentiment has materially changed household spending decisions, CBA economist Ashwin Clarke said.

Spending grew by 6.7 per cent in the first four weeks of April compared to the same period a year earlier, although petrol station spending was elevated, while travel, retail and eating and drinking out were softer.

Nervous homebuyers and refinancers weighing up their options for a fixed-rate mortgage face a much harder call as the threat of further interest rate hikes by the Reserve Bank through the rest of the year build.

Markets are pricing in about a three-in-four chance of a 0.25 percentage point increase in the cash rate when the RBA board meets today, after back-to-back hikes in February and March pushed it back to 4.1 per cent.

For borrowers, the question is not simply whether rates will rise again, but if paying for certainty now is worth the risk of being locked in later.

A rate rise this week would add another $91 a month to repayments for a borrower with a $600,000 mortgage and 25 years remaining on their loan, according to Canstar modelling.

We’ve crunched thenumbers to see if you’re now better off fixing your rates.

Read more here.

With most of us ahead on our mortgages, who exactly is the RBA targetting when it lofts rates?

Governor Michele Bullock has never shied away from the fact that hiking rates to turn the screws on a household’s disposable income is the only tool the central bank has to curb excess demand in the economy and bring down runaway prices.

But think about this.

According to the 2021 census, only about 35 per cent of all homes in Australia are covered by a mortgage. That’s a fraction of the population that has already been hit with back-to-back increases in their mortgage repayments this year — and with war raging in the Middle East, there’s the very real risk there could be three (or possibly four, depending on which market boffin you read) more to come this year.

So who exactly is the RBA squeezing?

Certainly not those cashed-up baby boomers at the travel agent booking their next overseas adventure. No doubt they worked hard all their lives and are now enjoying the fruits of years of sacrifice and saving. More power to them.

Instead, the RBA’s “blunt tool” (as Ms Bullock herself has called it) inevitably puts the most vulnerable — the ones who can least afford the financial burden — where an extra $60 a month can indeed be the difference between eating and keeping the lights on — to the sword in the name of economic stability.

Read more from Your Money editor Daniel Newell here.

There can be little doubt that we are all now living life inside the “when a butterfly flaps its wings” metaphor.

The US and Israel attacked Iran on February 28.

That leads to the closure of the Strait of Hormuz, creating a global oil supply crisis, which drives up prices at the bowser, adds to higher costs to manufacturers, farmers and transport companies, who then pass on those extra hikes to customers, forcing the price of everyday goods and services to rise, leading to rising inflation and (finally) higher interest rates.

And with no peace deal on the table and Donald Trump agian firing up the scorched earth rhetoric, it’s growingmore likely that the Reserve Bank will err on the side of caution - thinking this thing in the Middle East still has some way to go - and agree a third interest rate rise to be on the safe side.

That will erase the three cuts mortgage holders enjoyed last year.

The next question is will the RBA stop there?