At the March board meeting the Reserve Bank of Australia (RBA) has announced its cash rate decision, putting further pressure on household budgets.
Household budgets are set to be stretched after the RBA announced back-to-back rate hikes.
Following its two-day meeting, the central bank on Tuesday lifted the official cash rate by a further 25 basis points to 4.1 per cent.
Rates were also increased from 3.6 to 3.85 per cent in February.
Australia’s cash rate is now at its highest point since April 2025.
The widely anticipated increase means Australian families will need to find extra room in already tight household budgets to cover higher monthly home loan repayments.
Board split on decision
Only five of the nine monetary board members voted to lift interest rates.
In a statement, the Reserve Bank board said inflation pressures picked up materially in the second half and rates needed to rise to slow inflation and expectations of rising costs in the economy.
“In light of these considerations, the board judged that inflation is likely to remain above target for some time and that the risks have tilted further to the upside, including to inflation expectations,” the board said.
“It was therefore appropriate to increase the cash rate target.”
Middle East fears drove rate decision
The Reserve Bank board also confirmed the conflict in the Middle East added more challenges for the central bank to get inflation back to the target rate of 2-3 per cent.
“In addition, the conflict in the Middle East has resulted in sharply higher fuel prices, which, if sustained, will add to inflation,” the board said.
“Short-term measures of inflation expectations have already risen.
“As a result, the board judged that there is a material risk that inflation will remain above target for longer than previously anticipated.”
In its statement on monetary police released at its February meeting, the RBA predicted inflation would fall back to the target range by mid-2027 at the earliest.
Are you concerned about your household budget?
Your home loan payments no doubt have a significant impact on your household budget.
Our lending specialists not only offer you a free home loan review to potentially help you unlock savings on your home loan, we also will complete a full budget review with you, looking at all your personal debts – and business debts to if applicable.
This may help you consolidate debt to lower your monthly repayments or help you unlock equity to pay down high interest debt.
A free phone or web-based review of your home loan can take 5 minutes. With a fast application process like the LJ Hooker Home Loans Express REFI product you can potentially refinance within 7 days.
If you’re keen to switch and save, or just have a free home loan review, get in touch with one of our local specialists today. We can also offer free property market info to help with your equity assessment.
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.