RBA raises interest rates 0.25%

As expected, the Reserve Bank board has increased official interest rates by 0.25 percentage points to 6 per cent in August. This means home borrowers on variable rates will be paying an extra $17 a month in repayments on every $100,000 in outstanding borrowings.

“An increase in the cash rate was warranted in order to contain inflation in the medium term,” the RBA statement announcing the rate rise said.

“Based on the gradual increase in underlying inflation this year, and the wider background of above-average global growth and strong domestic demand … underlying inflation in the period ahead was likely to exceed previous forecasts.”