New blow for home owners as interest rates rise again

Mortgage holders have been slugged with another 0.25 percentage point interest rate rise.

The Reserve Bank board has opted to keep pressure on borrowers as it grapples with still-high inflation.

The quarterly consumer price index came in at seven per cent in the March quarter, well above the RBA’s two-three per cent target band.

The March quarter result was followed by a higher-than-expected 6.8 per cent lift in the less reliable monthly index for April.

The latest hike brings the cash rate to 4.1 per cent, its highest level since April 2012.

The June lift marks the 12th increase since May last year when the central bank first started jacking up interest rates.

RBA governor Philip Lowe also said some further tightening of monetary policy may be needed.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve,” he said in a statement.

“The board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market.”

In what most economists agreed was a close race between another hike and staying on hold, the RBA board was confronted with a mixed bag of economic data.

While inflation remains high, interest rate hikes are clearly taking the sting out of economic activity, with consumer spending pulling back and the labour market starting to weaken.

But wages growth has proved moderate and unlikely worried the RBA too much in its June decision.

By Poppy Johnston in Canberra