The Reserve Bank has left interest rates on hold but hinted more pain is possible for struggling home borrowers hoping for a rate cut soon.
Governor Michele Bullock said inflation was taking too long to moderate.
‘Recent information indicates that inflation continues to moderate, but is declining more slowly than expected,’ she said on Tuesday afternoon.
Ms Bullock also suggested another rate rise was still possible despite borrowers already coping with the most severe pace of monetary policy tightening since 1989.
‘The board expects that it will be some time yet before inflation is sustainably in the target range and will remain vigilant to upside risks,’ she said.
‘The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.’
The cash rate is already at a 12-year high of 4.35 per cent and borrowers are paying 68 per cent more a month they did two years ago – following 13 interest rate rises in 18 months.
The Reserve Bank has left interest rates on hold but hinted more pain is possible (pictured is Governor Michele Bullock)
But the RBA has updated its forecasts, predicting inflation will remain above its two to three per cent target into 2025.
Annual underlying measures of inflation, stripping out major price movements, were above the 4 per cent level in the March quarter.
This has seen the futures market rule out the prospect of a rate cut in 2024, and predict relief being postponed into the second half of 2025.
A borrower with an average, $600,000 mortgage has, since May 2022, seen their monthly mortgage repayments surge by 67.7 per cent to $3,868 – up from $2,306.
That means annual repayments are now $18,744 higher than they were two years ago, based on a Commonwealth Bank variable rate climbing to 6.69 per cent – up from 2.29 per cent for those with a 20 per cent mortgage deposit.
Australian mortgage holders have been hit with the most aggressive rate hikes since 1989, sparking a cost of living crisis for the nation’s 3.8million households servicing a mortgage.