RBA raises cash rate to 4.1%, squeezing mortgage holders

The Reserve Bank raised its cash rate from 3.85% to 4.1% in a split decision, with five board members voting to increase rates and four voting to hold. The move returns the cash rate to its February 2025 level and wipes out the relief from two cuts last year. The bank cited a global energy shock and a widening Middle East conflict that threaten to push Australian inflation towards 5%; inflation had already been 3.8% even before the US struck Iran.

The board said inflation is likely to remain above the 2–3% target for some time, noting the economy is growing at its fastest pace in almost three years and unemployment has fallen since September. Household budgets will face higher mortgage costs: a household with a $600,000, 25-year mortgage will see weekly repayments rise by another $91 a month once banks pass on the increase.

Australia

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