The RBA board a short time ago announced the cash rate would rise again, following a similar 25 basis points rise in February.

RBA governor Philip Lowe said that more rises could be expected.

“The board expects that further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary,” he said.

“In assessing when and how much further interest rates need to increase, the board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.”

Today’s increase continues an aggressive series of cash rate rises which began in May 2022 when the rate sat at 0.1 per cent. It’s now at its highest level since May 2012.

The Reserve Bank is determined to put a lid on household spending in order to rein in inflation to its target rate of two to three per cent. In December, inflation hit an annual rate of 7.8 per cent – the highest level since 1990.

After hiking rates by another 0.25 per cent in February, the RBA said more increases would likely be needed.

The Commonwealth Bank predicted one more lift to the cash rate before pausing, while Westpac, NAB and the ANZ tipped two more hikes after the March decision to take the cash rate to 4.1 per cent.

For mortgage holders, the latest hike will stretch household finances even further.

Analysis from comparison site Canstar showed another 25 basis points cash rate hike will add $1051 to monthly repayments (compared to April 2022 levels) on the average $500,000 loan with 30 years remaining on the term.

RateCity said that a cash rate increase to 3.6 per cent would add an extra $77 to monthly repayments on a $500,000 loan, with total monthly repayments increasing by nearly $1000 – or more than $11,000 a year – since May.

Some observers have warned that the increasing burden on mortgage holders coupled with other cost of living pressures risks tipping the economy into recession.

Government Services Minister Bill Shorten said this morning before the rate decision that another hike would be difficult for many mortgage holders.

“It’s going to be incredibly tough for families with mortgages. Quite frankly, I don’t know how a lot of them are doing it at the moment,” he said.

“I just want this cycle of pain to come to an end as soon as possible because at a certain point it’s almost counterproductive.”

Shorten said while it was important to tame inflation levels, at some point the rate rises had to stop.

-with AAP