The central bank chose to lift the cash rate target by 25 basis points to 4.10 per cent, surprising the financial markets and the majority of economists who predicted a pause on rate hikes in June.
"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," Lowe said. "The combination of higher interest rates and cost-of-living pressures is leading to a substantial slowing in household spending," he said. "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," he said.
Treasurer Jim Chalmers said today's decision would be hard to hear for millions of Australians, but said the it was not right to blame Australians for inflation-adding decision such as asking for pay rises or buying property."I do expect that there will be a lot of Australians who find this decision difficult to understand and difficult to cop.
"That's an additional $1,200 every month – a huge amount of extra money to be forking out on your mortgage."RateCity.com.au research director Sally Tindall said many Australian households are facing a financial reality few could have forecast when rates were at the historic low of 0.10 per cent in 2022.
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