Aussies HIT with a record fifth increase in rates

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PHOTO: The Reserve Bank of Australia

The Reserve Bank of Australia has just announced it will increase official interest rates for a record fifth consecutive month, lifting them by another half a percentage point as it races to bring inflation under control.

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Following its monthly meeting on Tuesday, the RBA increased the cash rate to a seven-year high of 2.35 per cent. At the start of May, the cash rate was still just 0.1 per cent.

**The RBA’s decision was made after figures from the Australian Bureau of Statistics showed consumer spending continuing to increase.CREDIT:LOUIE DOUVIS**

It is the most aggressive tightening of official rates by the bank since 1994 and the first time it has ever lifted rates at five consecutive meetings.

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The move, expected by markets and economists, will add $242 to the monthly repayments on an $800,000 mortgage. Since the RBA started lifting rates in May, the cumulative increase in repayments is now more than $1000 a month on an $800,000 loan.

The RBA’s decision was made after figures from the Australian Bureau of Statistics showed consumer spending continuing to increase.

Spending by households in July was 18.4 per cent up on the same month last year. Spending on services surged by 28.4 per cent, largely due to the reopening of key parts of the economy, but expenditure on goods was also up by 9.5 per cent.