The Reserve Bank is widely expected to lift the cash rate from 4.35 to 4.6 per cent this afternoon, its highest level since 2011 and its fourth increase this year.
asserted
Bank → expect → 2011
Borrowers who thought last year's three rate cuts marked the beginning of sustained relief have had those hopes comprehensively dashed.
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hopes → think → relief
If banks pass on the increase in full, Canstar estimates monthly mortgage repayments will rise by about $91 on a $600,000 mortgage, $114 on a $750,000 loan and $152 on a $1 million loan.
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repayments → pass → loan
The cumulative figures tell the more troubling story.
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figures → tell → story
Four rises this year would add about $364 a month to repayments on a $600,000 loan.
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rises → add → loan
That's roughly $4,400 and $7,300 a year respectively, coming out of income households have already paid tax on.
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households → come → tax
The rate rise is designed to address high inflation, which is already hurting families managing daily expenses.
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which → design → expenses
The consequences of today's expected rate rise will also extend well beyond mortgage holders.
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consequences → expect → holders
When households spend less, restaurants, retailers and other small businesses lose customers.
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restaurants → spend → customers
Those businesses also face higher borrowing costs of their own courtesy of rates going up.
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rates → face → courtesy
Weaker sales eventually affect hours worked, hiring and jobs.
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sales → affect → hours
That's how interest rates put a brake on demand right across the economy.
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rates → put → economy
RBA governor Michele Bullock is expected to announce the cash rate will lift from 4.35 to 4.6 per cent this afternoon
Four rate rises this year would add about $364 a month to repayments on a $600,000 loan
Would-be home buyers face a mixed picture going forward.
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buyers → expect → picture
Falling property prices may help, yet higher rates reduce what banks will lend them.
uncertain
banks → fall → them
Renters have no mortgage repayments to meet, but they still have to live with the effects of a softer jobs market and the difficulty of building more homes when finance is expensive.
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finance → have → homes
Some landlords will seek to recover increased borrowing costs through higher rents, although their ability to do so depends on local demand and supply.
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ability → seek → demand
The RBA has a clear reason for acting.
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RBA → have → reason
Underlying inflation has been running at 3.6 per cent, well above its 2 to 3 per cent target.
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inflation → underlie → target
Higher oil prices add to an inflation problem already being exasperated by domestic inflationary pressures.
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prices → add → pressures
Yet Finance Minister Katy Gallagher declared yesterday that 'the challenges that we're having now in relation to inflation are not caused by government spending'.
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we → declare → spending
In February, RBA governor Michele Bullock said 'we are seeing aggregate demand, public and private, push up against the limits of growth'.
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demand → say → growth
Public spending counts, even when ministers consider the programs worthwhile.
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programs → count → ?
The government can't control global oil prices, quite obviously.
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government → control → prices
But it should be able to control its own federal budget.
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it → control → budget
Finance Minister Katy Gallagher has declared her own portfolio blameless
Pressure from overseas should strengthen the case for restraint at home.
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Pressure → declare → home
Instead, borrowers are being asked to absorb another increase while the Finance Minister declares her own portfolio blameless.
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portfolio → ask → increase
Nor is there a reliable moment when things are likely to get any better.
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things → get → ?
ANZ expects another increase in November.
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ANZ → expect → November
CBA isn't currently forecasting one, but acknowledges the risk and has pushed its expected first rate cut all the way back to August next year.
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CBA → forecast → August
The RBA is left to weigh up the cost of persistently high inflation (when Labor isn't doing its part fiscally) against the damage another increase will do to an economy already slowing down.
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increase → leave → economy
The danger is that bringing inflation under control will cost Australians their jobs as well as more of their income.
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bringing → bring → income
That makes the government's refusal to acknowledge its own contribution harder to stomach.
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refusal → make → contribution
- READ MORE:'Australia must have high immigration OR ELSE!':
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MORE:'Australia → read → immigration
The Aporia
