RBA raises interest rates again after latest meeting

"Information since the February meeting suggests that some of the increase in inflation reflects greater capacity pressures," the board said.

"In addition, the conflict in the Middle East has resulted in sharply higher fuel prices, which, if sustained, will add to inflation. Short-term measures of inflation expectations have already risen."

Commonwealth Bank head of Australian economics Belinda Allen said that, with inflation still above target and the economy running above trend, the central bank's decision to lift rates today was unsurprising.

The major bank also expects the RBA to increase rates again in May.

"The outlook has shifted following a rapid change in the global environment. The escalation of conflict in the Middle East has increased uncertainty and raised the risk of higher energy prices, which could add to inflation pressures. At the same time, the conflict poses risks to global growth," Allen said.

Allen said that inflation remained the RBA's central concern.

“While global uncertainty has increased, the domestic economy is still proving resilient. Inflation remains too high and the labour market is tight, which keeps pressure on the Reserve Bank to act,” she said.

Mala Raghavan from the University of Tasmania similarly agreed that geopolitical tensions and the resulting disruption to global oil supplies were placing upward pressure on energy prices, increasing both actual inflation and inflation expectations.

"At the same time, Australia's labour market remains notably tight, with unemployment at low levels and wage growth persisting, while consumer spending has only softened marginally despite higher borrowing costs," she said.

"These dynamics suggest that inflationary pressures may prove more persistent than previously anticipated." 

Accounting Home Loans director of sales, Cullen Haynes, said he expected banks to pass on today's rate increase to borrowers within the week.

"The current average interest rate range for residential loans we are seeing today is approximately between 5.6 per cent to 5.9 per cent, depending on the product and your borrowing profile," he said.

"Every 25-basis point increase adds approximately $161 per month to repayments on a $1 million mortgage and can reduce borrowing capacity by around $30,000 to $40,000."

Haynes said borrowers who were concerned about rising mortgage repayments and their impact on their household budget should speak to their bank or broker to explore the best structure for their needs.

"Doing so will not impact your credit history, and it is better to reach out early before falling into arrears," he said.

Despite the increase in interest rates, Haynes said economists still predict property prices to rise further in 2026.

"If you're considering purchasing a property, now is a good time to get your pre-approval in place. Having pre-approval ready ensures you can move quickly when you find the right property," he said.