RBA interest rates live updates: Reserve delivers blow to homeowners after three rounds of relief

Treasurer Jim Chalmers has come under fire in Question Time following the Reserve Bank’s decision to lift interest rates for the first time in more than two years.

Within moments of the decision being announced, Mr Chalmers put the blame for the move on the former coalition government and external pressures.

“Mr Speaker, now I want to make it really clear to the house and the people watching from home, Mr Speaker, that the statement released by the independent Reserve Bank explaining the decision that they have taken today does not mention Government spending,” Dr Chalmers said.

“It makes it very clear that the pressure on inflation is coming from private demand.

“Mr Speaker, they left us much higher inflation and left us a much weaker budget.

“This side of the house is focused on the cost-of-living challenge. That side of the house is focused on who sits where from one week to the next. We won’t be distracted by opposition parties, which are divided, decisive and in disarray.”

The answer is simple - hit up your lender for a better deal if it passes on the full whack.

Cracks are appearing in the facade of the big four banks, which combined have a market captial worth of just over $625 billion.

Macquarie Bank is breathing down the neck of two big lenders so competition is hot to keep your business ... and just 10 minutes of your time on the phone could help to wipe out some (if not all) of today’s hike.

Those in the best position to negotiate will have a decent block of equity in their home.

With a red hot housing market, your little slice of the Australian dream could well be worth a hell of a lot more than you think it is - giving you equity you never knew you had, a just the boost you need to ease the pain.

Do your research, find a better deal and demand your lender matches (or betters) it.

Loyalty could be robbing you (and your financial future) blind.

VanEck’s head of investments and capital markets, Russel Chesler, said the RBA board was stuck between a rock and a hard place today.

The result was a rate hike and a blow for millions of homeowners who will now have to find extra to meet their minimum monthly repayments.

“The economy is running hot and the RBA had no real choice but to pull the trigger today,” Mr Chesler said.

“While the move was widely expected ... the RBA is a long way from declaring victory, and one rate rise alone is unlikely to do the job.

“What makes this decision more consequential is that the economy is showing few signs of cooling. Unemployment remains low at 4.1 per cent, household spending is holding up, and property prices continue to climb.

“Yesterday’s ANZ-Indeed Job Ads data showed ads jumping 4.4 per cent month-on-month in January, the strongest increase since early 2022, signalling renewed momentum in the labour market rather than the slowdown the RBA would be hoping for.”

The Reserve Bank’s key message from its rates decision - released just moments ago - doesn’t offer much home for borrowers going forward.

It also said that the rise in consumer prices is not just down to one-off factors such as the end of power rebates.

The board said it “considers that inflation is likely to remain above target for some time”.

RBA govenor Michele Bullock knows full-well that homeowners shoulder the biggest burden when rates rise but has in the past argued that the risk of doing nothing to tame inflation would hurt everyone.

Here’s what the board had to say ..

A wide range of data over recent months have confirmed that inflationary pressures picked up materially in the second half of 2025. 

“While part of the pick-up in inflation is assessed to reflect temporary factors, it is evident that private demand is growing more quickly than expected, capacity pressures are greater than previously assessed and labour market conditions are a little tight.”

For an owner-occupier with a $600,000 mortgage and 25 years remaining, it would see their minimum monthly repayments rise by $90, assuming the banks pass it on (who are we kidding?)

Here’s what it means for other-sized mortgages ..

Compare the Market’s economic director David Koch says a rate rise “seems like the medicine we need to take to stop inflation accelerating, or at least that’s the judgement from the RBA”.

“If banks pass it on, as I expect they will, this will have a direct and immediate impact on household budgets, particularly for borrowers with larger mortgages or those who have only been paying the minimum repayments.

“We’re talking pushing monthly repayments up by about $94 for someone with a $600,000 mortgage. That’s about an extra $1128 a year — money many households simply don’t have to spare when they’re also being hit with higher grocery costs, insurance premiums and energy bills.”

As expected, the board was atune to stubborn inflation which it said had “picked up materially in the second half of 2025.

“The board has been closely monitoring the economy and judges that some of the increase in inflation reflects greater capacity pressures.”

“As a result, the board considers that inflation is likely to remain above target for some time.”

“There are uncertainties about the outlook for domestic economic activity and inflation and the extent to which monetary policy is restrictive.

“On the domestic side, if growth in demand is stronger than expected, and growth in the economy’s supply capacity remains limited, it is likely to add further to capacity pressures.

“Uncertainty in the global economy remains significant but so far there has been little or no depressing effect on the Australian economy; indeed, recent growth and trade in Australia’s major trading partners has surprised on the upside.”

The Reserve Bank board has upped its official cash rate to 3.85 per cent, matching market punters’ expectations that it was necessary to keep a lid on inflation that had crept back outside its comfort zone.

Expectations are high for a Reserve Bank rate hike at its first meeting of the year, but what it does next is much less certain.

As the central bank’s board was ensconced in deliberation at its temporary digs around the corner from Martin Place, bond traders were pricing in a greater-than-three-quarter chance of a 25 basis point hike.

Having previously opened the door to a hike with hawkish commentary in December, it was harder now not to walk through it, JP Morgan economists Ben Jarman, Tom Kennedy and Tom Ryan said.

While most economists agree a rate rise on Tuesday is inevitable, they don’t all share the market’s belief the Reserve Bank will hike again before the end of 2026.

“We don’t see a case for further tightening past February at this stage, unless the RBA staff’s forecasts change in a substantial way,” Mr Jarman, Mr Kennedy and Mr Ryan said.

Commonwealth Bank head of Australian economics Belinda Allen agreed.

“We think the RBA will be one and done for interest rate hikes in 2026,” she told AAP.

“Inflation is too high, the economy is growing a little bit above its potential, but it won’t take much to bring the economy and inflation back into balance.

“The risk, of course, is that more will need to be done.

“A lot of that will be driven by how the labour market performs and how upcoming inflation prints go.”

We’re just half an hour away from the RBA’s call on rates.

The decision rests on a knife’s edge, according to comparion site Finder.

More than half of the experts - 17 of 33 from Finder’s RBA Cash Rate Survey believe the RBA will raise the cash rate, bringing it to 3.85 p[er cent in February.

Whci way will it go?

Stay tuned and we’ll bring you all the latest updates as they happen ... and all the infortmation you need to know about what it means for your mortgage and family budget.

Hunting for a home loan?

You can kiss goodbye to rates under 5 per cent if they go up today. It would mark the first hike in two years if the RBA decides one is needed to pull inflation back into its comfort zone.

Here’s what you need to know if you’re shopping for a loan and the RBA lifts rates 0.25 percentage-points today:

• 5.77 per cent would be the new average variable rate for owner-occupiers.
• 6.02 per cent would be the new average variable rate for investors.
• Four lenders would offer a variable rate under 5.25 per cent, down from the 42 currently.
• Fixed and variable rates under 5 per cent would no longer exist.

Rate tracking by Canstar shows a total of 60 lenders have hiked at least one fixed rate since the last cash rate decision on December 9. This compares to only two lenders that have cut fixed rates in this time.

There are now just six lenders offering a fixed rate below 5 per cent, down from 46 three months ago.