Reserve Bank hikes interest rates by 25 basis points in June 2023 – 12th since May 2022

The Reserve Bank of Australia has hiked interest rates by another 25 basis points – marking the 12th increase in little more than a year.

The cash rate has now risen to an 11-year high of 4.1 per cent and will add $97 to monthly repayments on a typical $600,000 mortgage.

Governor Philip Lowe said inflation was still too high after April’s monthly reading showed inflation rising to 6.8 per cent, up from 6.3 per cent.

‘Inflation in Australia has passed its peak, but at 7 per cent is still too high and it will be some time yet before it is back in the target range,’ he said.

Dr Lowe said this would be far from the last increase even though annual inflation in the March quarter had moderated to 7 per cent, down from a 32-year high of 7.8 per cent in the December quarter. 

‘Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve,’ Dr Lowe said.

The latest increase will see a borrower with an average $600,000 mortgage pay an extra $97 every month following the latest 0.25 percentage point rate rise.

Borrowers have now copped 12 interest rate rises since May 2022, marking the most severe pace of monetary policy tightening since the era of the target cash rate began in 1990.

Interest rates haven’t increased so aggressively since 1989, when they hit 18 per cent. 

Governor Philip Lowe said inflation was still too high following the latest interest rate rise