The Reserve Bank has lifted interest rates for the first time in more than two years, hitting mortgage holders after a renewed surge in inflation.
The Reserve Bank of Australia increased the cash rate target by 25 basis points to 3.85% following its two-day monetary policy meeting.
The move ends the shortest rate-cutting cycle in the bank’s modern history, after reductions in February, May and August last year.
The rate hike will add about $90 a month to repayments on a $600,000 mortgage, lifting the monthly cost to $3,782, according to Canstar.
Some economists had warned the decision risked overreacting to a recent inflation uptick and could derail the economic recovery.
RBA governor Michele Bullock is due to explain the decision and signal the outlook for future rates at a press conference at 3:30pm.
