As predicted, the Reserve Bank has lifted the cash rate 50 basis points to 1.85 per cent.
Analysts have downgraded predictions that the rate could hit 4.5 per cent later this year, now tipping the cash rate will peak at 3 per cent.
“The board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path,” RBA Governor Philip Lowe said.
“The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.”
Treasurer Jim Chalmers told press he expected banks to pass on interest rate increases to its customers, after saying it was “really disappointing” higher rates were not being passed on to savers.
“Savers have been the principal victims of interest rates when they’re incredibly low and they should be the beneficiaries of rising interest rates,” Chalmers said.
“They’ve been doing it tough for some time now and it’s time they got a bit of relief.”
Chalmers also noted the squeeze on mortgages.
“At the same time as they’re struggling with some of these other electricity prices and grocery prices and all the rest of it, we don’t underestimate or lightly dismiss the pressure on family budgets from these interest rate rises.”