More interest rate rises forecast for embattled homeowners

More interest rate rises are forecast for already embattled Aussie homeowners but renters are also facing steep price increases, the nation's central bank has warned.

The Reserve Bank of Australia's Statement on Monetary Policy revealed Australia's near-term inflation is likely to decline faster than previously forecast but the record interest rate rises are set to continue.

"Inflation has passed its peak in Australia but remains very high," the bank said.

"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve."

The bank flagged inflation could decline faster if goods inflation eases quickly due to less Aussie consumer spending.

The central bank's inflation target is between 2 and 3 per cent where it currently sits at 7 per cent in the March quarter.

It comes after the RBA paused interest rises in April but restarted the relentless hikes in its shock May decision to raise the cash rate by 25 basis points to 3.85 per cent.

Although the board acknowledged the pressure the rate rises have placed on Aussie homeowners, it remains resolute in its one-track target to wrangle surging inflation.

But it isn't just homeowners feeling the squeeze, the bank has forecast renters are in for a torrid year with predicted price rises more so than previously considered.

"Rent inflation could also be higher and more persistent than forecast," the bank said.

With the population growing and the return of migration following the pandemic to an already "tight" market, the supply and demand framework lends itself to the forecast by the bank that prices must go up.

"Higher rents are likely to encourage the average number of people living in each dwelling to increase, which would be a reversal of the decline that occurred during the pandemic as people sought more space," the bank said.

"It is possible that rents need to rise by more than expected to bring about this increase in household size."

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