Warning for homeowners on ‘what is necessary’ to tame inflation, as pressure mounts on RBA Governor Philip Lowe

The RBA has issued a grim warning it will do whatever it takes to bring down inflation — leading to a call for the bank’s boss to step down.

The Reserve Bank has issued a grim warning it will do whatever it takes to bring down inflation and warned homeowners to expect more pain to come after hiking interest rates for the ninth time since May — leading to a call for the bank’s boss to step down.

The RBA Governor Philip Lowe outlined his reasons for inflicting more pain on families on Tuesday after hiking interest rates by 25 basis points.

“The Board expects that further increases in interest rates will be needed over the months ahead,’’ Dr Lowe said.

“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”

In response, the Greens Treasury spokesman Nick McKim warned “the RBA is willing to smash Australia into a recession in pursuit of policy that is only benefiting the already wealthy.”

Philip Lowe, governor of the Reserve Bank of Australia (RBA). Picture: Brendon Thorne/Bloomberg via Getty Images

“The Treasurer needs to do two things,’’ he said. “Firstly, he needs to ask Philip Lowe for his resignation.

“Secondly, he needs to use the powers he has to reverse today’s decision by the RBA.”

Warning global inflation remains ‘very high’ the RBA said the pressures were however moderating in response to lower energy prices, the resolution of supply-chain problems and the tightening of monetary policy.

“As economic growth slows, unemployment is expected to increase,’’ Dr Lowe said. “The central forecast is for the unemployment rate to increase to 3.75 per cent by the end of this year and 4.5 per cent by mid-2025.”

In Parliament today, Anthony Albanese came under sustained attack over the soaring cost of living with the ‘typical’ new homeowner in NSW being slugged a stunning $1,574 extra a month in interest payments.

As a result of the RBA’s latest interest rate rise today, those families with a $750,000 mortgage are now paying $18,892 a year or $5,383 a month.

Liberal leader Peter Dutton has unleashed in question time ahead of the Reserve Bank’s decision to hike interest rates for the ninth time since May.

He based his question on a typical new entrant to the housing market in NSW, which he says are paying off a whopping $750,000 mortgage.

That’s substantially more than the average mortgage – which is closer to $350,000 – but does represent the mortgage of many young families who entered the market in recent years.

Even before today’s increase, Mr Dutton said families were being hit hard by rising interest rates.

Leader of the Opposition Peter Dutton. Picture: Martin Ollman/Getty Images

“The typical family is paying $1400 more each month on their mortgage without taking into account increases in grocery and power bills,’’ Mr Dutton said.

“So I ask the Prime Minister, why do Australian families always pay more under Labor?.”

Before today’s 25 basis point rate hike, the same family was paying much more, with monthly payments rising from $3809 to $5,254.

Prime Minister Anthony Albanese responded to the question by highlighting a $10 reduction in the cost of prescription medicines.

“Indeed, Australians, when they went to their chemist any time from January 1, were better off,’’ he said.

The reduction resulted in a price cut to PBS medicine from $42.50 down to $30.

“The fact is we are acting responsibly to take the pressure off. Cheaper medicine, energy price relief, pay for annual leave, all of these measures are there and of course, interest rates started to increase under the former government.”

Mr Albanese said the higher interest rates were a consequence of the Russian invasion of Ukraine, placing pressure on supply chains and placing pressure on inflation globally.

In Parliament, Treasurer Jim Chalmers said there was growing evidence to suggest inflation has already peaked.

“It’s our job, broader pressures that are coming around the world, and felt around kitchen tables in this country, and our plan to address this high inflation which is causing these rising interest rates has three main parts to it,” Dr Chalmers said.