Anthony Albanese is facing growing calls to deliver substantial cost-of-living relief in his first budget next month as inflation pressures intensify and the Reserve Bank drives up interest rates to their highest level in seven years.
After the RBA yesterday took the cash rate to 2.35 per cent, adding another $242 to the monthly repayments on an $800,000 mortgage, the prime minister declared the October budget would give some respite to voters being hit by a surge in price pressures.
The bank, which had official interest rates at just 0.1 per cent at the start of May, has now increased rates by a combined 2.25 percentage points in five months. It is the most aggressive tightening of monetary policy since 1994, with the bank signalling it will continue to increase rates in coming months.
The lift in rates is aimed at bringing inflation, currently at 6.1 per cent and forecast by the RBA to reach 7.75 per cent by year’s end, under control. But it is also adding thousands of dollars a year to the interest bill on mortgages which climbed to record highs during the pandemic.