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The Reserve Bank of Australia (RBA) has increased interest rates for the 10th consecutive meeting in a row as it desperately battles to bring down spiralling inflation.
Australia's official cash rate target was increased by 25 basis points at the board's March meeting, taking the nation's rate to 3.6 per cent.
It is the highest interest rate since May 2012 and represents the fastest tightening cycle by the RBA since the 1980s.
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Canstar calculations show for the Australian mortgage holder with a $500,000 loan, today's hike adds $82 to the monthly mortgage repayment.
On that same loan, since interest rates were at the rock-bottom 0.1 per cent in April 2021, monthly repayments have increased by $1051.
Borrowers with larger loans of $1 million have seen their monthly repayments increase by an eye-watering $2103 over the same 10 months.
Governor Philip Lowe, who has been under increased pressure over the speed of the RBA's rate hikes, warned that the "path to achieving a soft landing remains a narrow one".
"The Board's priority is to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy," Lowe said.
"And if high inflation were to become entrenched in people's expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment.
"The Board is seeking to return inflation to the 2–3 per cent target range while keeping the economy on an even keel, but the path to achieving a soft landing remains a narrow one."
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Lowe said he was well aware of the financial constraints facing Australian households.
"Some households have substantial savings buffers, but others are experiencing a painful squeeze on their budgets due to higher interest rates and the increase in the cost of living," he said.
"Household balance sheets are also being affected by the decline in housing prices. Another source of uncertainty is how the global economy responds to the large and rapid increase in interest rates around the world.
"These uncertainties mean that there are a range of potential scenarios for the Australian economy."
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Lowe said he expects more rate hikes will be needed to bring inflation down.
"The Board expects that further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary," he said.
"In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.
"The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that."
Food charities said they have seen as much as a 50 per cent increase in demand since Christmas, as Australians struggle to make ends meet.
"Of that 50 per cent, at least 20 per cent of presentations are first time users of the service," Michael Pernar from Laverton Community Integrated Services said.
Graham Cooke, head of consumer research at Finder, said it was bad news for homeowners already doing it tough and warned more hard times were likely ahead.
"Australians with the average loan size of around $600k will be forking out over $13,000 more per year on their mortgage compared to what they were paying a year ago," he said.
"While homeowners deserve a break from the relentless increase in pressure, we can expect ever more hikes from the RBA this year."
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Eleanor Creagh, senior economist at property data firm PropTrack, said it's likely that the RBA is nearing the peak of hiking cycle.
"We're closer to the peak in interest rate tightening than not and if the Reserve Bank hits pause on its tightening cycle later this year, home prices will likely begin to stabilise as some of the uncertainty buyers have experienced with respect to borrowing capacities and mortgage servicing costs reduces," she said.
"The downward pressure from rate rises will also be countered to a degree by positive demand effects that stem from tight rental markets and rental price pressures, rebounding foreign migration, stronger wages growth, and over the long run, housing supply pressures."
Ten-straight interest rate hikes have dramatically increased the focus on Australia's central bank, with many calling for Lowe to stand down.
Despite this – and two sustained parliamentary inquiries – Lowe has remained defiant that he and the board will do whatever is necessary to curtail inflation.
"We recognise it's really difficult if you've got a mortgage and the interest rate has gone up," he told a Senate estimates committee last month.
"I get a lot of people writing to me at the moment telling me about their personal circumstances and it's really, really tough, I understand that.
"It's the job of the central bank to control inflation, to make sure that inflation expectations don't adjust and we avoid all those terrible things."
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