Hold on tight AUSTRALIA: Mortgage rates set to rise | Cash Rate LIFTS 0.35%

The Reserve Bank has lifted the official interest rate to 0.35 per cent, less than three weeks out from a federal election focused on the cost of living pressures being felt by households across the country.

Following its May board meeting this afternoon, RBA governor Philip Lowe confirmed a 0.25 percentage point increase.

“The Board judged that now was the right time to begin withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic,” Lowe said.

It is the first rate increase in official interest rates since November 2010 and the first intervention by the bank in an election campaign since 2007.

The increase is likely to be the first of a series aimed at dealing with inflation which reached 5.1 per cent in the year to the end of the March quarter.

The decision will play directly into an election campaign dominated by cost of living issues.