RBA Hikes Rates Again, Mortgage Holders Feel Pinch

0:00In Adelaide, it's March 17th, and here's what is going on. The Reserve Bank of Australia raised interest rates again this week, marking the second hike in two months. In a close 5-4 vote on Tuesday, they bumped the cash rate up by 25 basis points to 4.1%. This follows the same increase back in February as they tackled stubborn inflation. Economists and markets saw this coming, with most expecting the move. Think issues like a tight job market and solid growth were already fueling higher prices. Then the Middle East conflict escalated, with attacks leading to the straight of Hormuz closing and energy prices spiking worldwide. Experts warned, this will squeeze mortgage holders after years of cheat borrowing. One economist noted households felt the pinch last time rates rose, and more pain could be ahead. Still, they say it's needed since inflation hit 3.8% last January. All above the 2-3% target. The bank isn't blaming the war alone, inflation never fully cooled after the pandemic surge.

1:02High public spending beyond tax income has made things tougher, leaving the economy exposed to shocks like this oil mess. Markets now bet on two more hikes next year, pushing rates to 4.6% by Christmas. All eyes are on the central bank governor's press conference for hints on what's next. This story is made possible by our sponsor, see the episode description. If earbuds fall out when you sleep, this is for you, a pillow with built-in sound, L.L.I. SoleyPillow.com Made in AI