Borrowers eye Reserve Bank as it decides on interest rates rise

The Reserve Bank of Australia will meet today to consider whether to raise interest rates for the eleventh consecutive time.

Economists are fairly split between whether the RBA will put a hold on rates or lift them by another 0.25 per cent to 3.85 per cent.

It would leave those with a $500,000 mortgage paying an extra $77 a month, on top of the already added repayments, close to $1,000 a month.

Governor of the Reserve Bank Philip Lowe is under pressure to put a hold on interest rate rises. (Photo: Alex Ellinghausen) (Nine)

Currently the cash rate target of 3.6 per cent is the highest since May 2012, after the RBA hiked interest rates for 10 consecutive meetings.

Economists at the ANZ and NAB banks are tipping a rise, while St George economic experts are forecasting a pause.

RBA Governor Philip Lowe has cited persistent inflation – currently sitting above 7 per cent – as the primary driver of the bank’s decision to continue lifting rates.

The RBA has consistently said it intends to return inflation to between 2 and 3 per cent.

But the latest retail trade and inflation figures suggests they are starting to slow the economy and ease the threat of rising inflation.

Agent pays landlord compensation squatter male wielding machete — The latest figures showed the inflation rate in the year to February was slightly down on the previous month. (Domain)

Australia’s inflation rate rose 6.8 per cent in the year to February 2023, down slightly on the 7.4 per cent annual rise reported in January.

And hopes that the RBA would hold interest rates steady at its April board meeting today have been bolstered by comments from Lowe at a business event.

“With monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy,” Lowe told the Australian Financial Review’s Business Summit last month.

Global disruption in the US and European banking markets have also added momentum for a pause in interest rate hikes in Australia.

The Australian Council of Social Service warned continuing hikes would impact some of the nation’s most vulnerable people.

Chief executive Cassandra Goldie said another rate rise would only add to existing cost-of-living pressures and push many into unemployment and poverty.

“Right now millions of people are being forced to make appalling choices between food and medicine in one of the world’s wealthiest nations.

“People on JobSeeker and related payments cannot afford to eat enough, cannot get essential medication or healthcare, and often go into debt to pay their energy bills.”