Many experts are forecasting another supersized 50 basis point hike, although a smaller 25 basis point lift has not been ruled out.

The Reserve Bank of Australia has indicated it is getting closer to a “neutral” rate, which is where monetary policy is neither stimulatory nor contractionary.

AMP Capital’s Shane Oliver said the fastest rate hiking cycle since 1994 risked throwing the economy into a “recession we don’t have to have”.

He told AAP that Australia had much higher levels of debt than in the mid-nineties, meaning households are much more sensitive to rate hikes.

Oliver also said higher mortgage repayments take a few months to show up in bank accounts, and even longer for people on fixed rates who will feel the impact in one large hit.

As such, Oliver is going against the consensus of a 50 basis point hike and anticipating a 25 basis point lift when the board meets on Tuesday afternoon.

“If the RBA do hike by 50 basis points today, they will certainly slow down after that, as they have indicated they are aware they have moved fast already and rate hikes act with a lag,” he said.

Australia is also in a much different position to the United States, according to Atrium Investment’s Brendan Paul, who says the world’s biggest economy is much more resilient to fast-rising interest rates.

“The US is somewhat insulated from this effect due to most of their mortgages being fixed rate,” he said.

“Conversely, in Australia, the speed of mortgage rate increases and the larger loan amounts have the potential to cause a significant rise in mortgage default rates.”

Oliver said inflation was also not as severe in Australia as in the US, and wages growth was much slower.

Independent economist Stephen Koukoulas also called for a slowdown in rate hikes to 25 basis points, arguing that another 50bp lift would be “reckless and dumb”.

“The drover’s dog can see inflation free-falling in 2023. I wonder if the RBA Board can?” he said.

He said the RBA needed to put more emphasis on the forward outlook and put less weight on recent data.

“The world economy is changing at a breakneck pace. And not in a good way,” he said.

Greens treasury spokesman Nick McKim also warned of growing recession risk caused by another rate hike.

“Domestically, inflation is being driven by corporate profiteering,” he said.

“Rather than his usual tactic of talking down wages, Governor Philip Lowe should use (Tuesday’s) meeting as an opportunity to put pressure on business to stop price gouging.”

Rising interest rates are also widening the gap between what is paid by new and existing home loan customers, according to RateCity data.

Banks tend to offer lower introductory home loan rates to attract new business and leave existing customers on less competitive rates.

The average introductory variable home loan rate at one of the big four banks is now 0.26 percentage points lower than the lowest rate offered six months ago.

“New customer discounts have picked up steam since the RBA cash rate hikes started,” RateCity research director Sally Tindall said.

“Refinancing is booming as people seek out lower rates and that’s forced the banks to put better rates on the table.”

The RBA started lifting interest rates from record low levels in May.

-AAP