RBA interest rates: Reserve Bank hikes cash rate for fifth time this year in blow to mortgage holders

The Reserve Bank of Australia has increased the official cash rate to 4.85%, its highest level since 2008, marking the fifth hike this year. The move aims to regain control of soaring inflation, which reached 4.3% year-on-year in September, following a global oil shock sparked by the Middle East conflict. The RBA's decision is anticipated, given the consistent talks from senior officials.

The cash rate surge will impose further financial strain on over 3.3 million Australian households with home loans and intensify pressure on the federal government. For a $700,000 mortgage, the monthly payment will rise by $107, with total repayments increasing by $532 over this year's five hikes. Treasurer Jim Chalmers warned that higher borrowing costs would exacerbate difficulties.

The announcement arrives amid growing concerns over the adverse effects of elevated interest rates, with two major banks reducing their growth forecasts for the Australian economy, predicting a sharper and longer slowdown.