The Reserve Bank board has lifted the official cash rate from 3.6 per cent to 3.85 per cent in a surprise move just a week out from the federal budget, amid signs households are continuing to feel cost-of-living pressures.
Financial markets had said there was a 100 per cent chance of the RBA holding the cash rate steady, and most economists also believed the bank would pause.
The increase in the cash rate – now at its highest level in 11 years – comes a year after the central bank started raising it from the historic low of 0.1 per cent in a bid to tackle inflation.
Reserve Bank governor Philip Lowe said inflation, at 7 per cent, was still too high and would take some time to come back down to the bank’s target range of 2-3 per cent.
“The board’s priority remains to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy,” he said.
“Given the importance of returning inflation to target within a reasonable timeframe, the Board judged that a further increase in interest rates was warranted today.”
The move will add almost $100 a month to the repayments on a $600,000 mortgage. The cumulative increase on repayments since the bank started lifting rates would then be more than $1300 a month.
That’s where we’ll leave our live updates for today, thank you for joining us. We’ll back bright and early tomorrow. If you’re just tuning in, here’s a quick recap of what you might have missed:
- The Reserve Bank board has lifted the official cash rate from 3.6 per cent to 3.85 per cent in a surprise move a week before the federal budget. Treasurer Jim Chalmers acknowledged it was a difficult decision for Australians struggling with cost-of-living pressures, but signalled there would be some relief in next week’s budget. Opposition Treasury spokesman Angus Taylor said the rate hike showed the government had failed to devise a clear plan to fight inflation.
- Disposable vapes will be banned in Australia under a major crackdown on vaping that aims to rid convenience store shelves of thousands of products. Health Minister Mark Butler has also announced the tobacco tax will be increased by 5 per cent per year over the next three years. Federal Liberal leader Peter Dutton says the opposition will support “sensible” measures on vapes and wants to see more details on the changes.
- Qantas’s chief executive officer Alan Joyce will step down from the carrier in November after 15 years at the helm. He will be replaced by chief financial officer Vanessa Hudson in November.
- The Victorian Coalition formally agreed to give its MPs a free vote on the upcoming referendum to enshrine an Indigenous Voice to federal parliament.
- In NSW, Kathleen Folbigg’s legal team has urged the attorney-general to take steps to secure her early release from prison on parole, pending the final report of a landmark inquiry into her convictions over the deaths of her four children.
- Overseas, the White House estimates Russia has suffered 100,000 casualties, including more than 20,000 killed, since December, as Ukraine has rebuffed a heavy assault by Russian forces in eastern Ukraine.
- And today was the first Monday in May in the US, which means celebrities have walked the red carpet at the Met Gala, the annual charity ball for the Metropolitan Museum of Art Costume Institute in New York. You can view our gallery of this year’s fashion highlights here.
Tourists have been urged to respect local laws and customs when travelling overseas following the recent arrests of two Australian men who are facing prison time for alleged crimes in Indonesia.
In advice issued today, the Department of Foreign Affairs and Trade pleaded with Australians not to leave their manners and common sense at home when they hopped on a plane headed overseas.
“Don’t dismiss or mock local [cultural] practices because they’re unfamiliar, or you disagree with them,” the department’s Smart Traveller website warns.
“Many countries will cancel your visa if your behaviour is considered offensive or disruptive to the locals.”
Australian man Brenton Craig Abbas Abdullah McArthur, 47, was arrested on the weekend for allegedly spitting in the face of an imam at a mosque in the Indonesian city of Bandung on Friday.
Noosa carpenter Bodhi Mani Risby-Jones, 23, was arrested in Indonesia’s ultra-conservative Aceh province, accused of an alcohol-fuelled, naked rampage outside a beachside resort that left a passer-by in hospital and prompted an angry mob of residents to threaten to burn down the hotel.
The chief of the village where the alleged incident occurred has said the resort Risby-Jones was staying in must slaughter a goat to restore peace to the deeply conservative Muslim community.
Risby-Jones faces as many as five years in prison if convicted.
The government’s travel advice said tourists shouldn’t expect to be treated differently by local authorities because they were Australian.
“It’s your responsibility to research the local laws in your destination and obey them. Even if they seem harsh or unfair by Australian standards. Like in Australia, local police are unlikely to accept ‘I didn’t know’ as an excuse for breaking the law.
The government was limited in how and when it could help if Australians broke local laws, the advice said.
“We can’t get you out of trouble, out of jail, or pay your legal bills or fines. Stay within the law, and you won’t need our help.”
Assistant Health Minister Ged Kearney believes the federal government’s ban on disposable vapes used by more than one million Australians will have a “profound impact” on young people’s health.
Health Minister Mark Butler today announced the major crackdown on vaping products in a bid to rid convenience store shelves of thousands of products. He also said the tobacco tax would go up 5 per cent per year over three years.
Speaking on ABC’s Afternoon Briefing, Kearney said Labor was “really going out on the front foot” with the policy, which she felt would have a “profound impact on the health of our young people”.
“Predominantly it is young people who are taking up vaping. We don’t want that generation to be addicted to nicotine, so we have a really great opportunity to start afresh,” Kearney said.
Kearney said the government would provide more detail in the budget on how online sales and international border checks would be managed. But she said this was something the government would do with states and territories, who would mostly monitor and run compliance measures.
“To say that it will be too hard, that we will never be able to do it is not an option for this government, [and] not an option for parents of these young people who they see getting addicted to these vapes. We have to start somewhere where we can, and those measures will be worked out over time with the states, our own border force, controls and a plan will emerge over time.
“Is just too important to say it’s too hard, we have to try.”
NSW Premier Chris Minns has foreshadowed an end to the popular Active Kids voucher program in July if the government cannot find the $130 million needed to fund the program for another year.
The premier said the stimulus program, launched by the former Coalition government to help parents fund sports activities, had not been fully funded by his predecessors and could be cut under a pre-budget review.
“It’s not current to the existing budget, we have to find the funds to ensure that the program can continue,” he said.
“We’re having a line by line audit of the budget to ensure that taxpayers are getting value for money and that we can have a sustainable program going forward.“
The program was established in 2018 to give more families and children access to community sport programs. More than 4.85 million vouchers had been redeemed, valued at $481 million at the start of this year.
Opposition leader Mark Speakman said any moves to scrap the program would constitute a backflip from the new government, who he accused of “looking for cuts to satisfy union bosses”.
“This program has been incredibly popular, but now it is under threat. Chris Minns went to the last election saying he would roll over this program, and now we know that the government is looking at accessing it,” he said.
“And they’re looking at accessing it because they’re trying to appease union bosses who want more out of the public purse…the government is creating uncertainty about the future of Active Kids vouchers and creating uncertainty about the future government spending.”
Business Council of Australia chief Jennifer Westacott has joined several industry leaders to warn the federal government its clamp down on international students’ work hours could leave large parts of the economy exposed.
Labor has decided to cap the currently unlimited work hours for international students to 48 hours a fortnight to mitigate against temporary migrants being exploited as cheap labour, and ensuring entrants on student visas are primarily in Australia to study.
Westacott said that, while she acknowledged this priority, Australia was experiencing an “incredibly tight” jobs market, with the rate of unemployment at a 50-year low.
“This change will need to be very carefully considered because a lack of workers doesn’t just hold back our productivity, it makes it harder for Australians to get the services they want and need,” she said.
Westacott said Labor’s plan to create another migration pathway for low-paid jobs could solve the shortfall, “but until it is actually established, we’re at risk of seeing serious gaps in sectors where students have been critical, like retail and hospitality”.
Aged care providers have called for a six-month delay on the restrictions to mitigate the shock on its critically thin workforce, while the hospitality lobby said the restriction would also have an impact.
Australian Industry Group chief Innes Willox said the aged-care sector’s concerns were shared across the economy.
“It is clear that as working rights of international students are wound back, alternative migration pathways will be needed to ensure we avoid areas of potential labour shortages across significant segments of the economy,” he said.
Australian Retailers Association head Paul Zahra said internation students were critical to the health of the $400 million industry, adding lower numbers of students recently had wounded retail.
“There’s no silver bullet to solve the current workforce challenges – a range of solutions needs to be implemented. But there’s no doubt that maintaining the current flexibility around working hours for students would go a long way in addressing the current workforce challenges,” Zahra said.
Shadow treasurer Angus Taylor has seized the Reserve Bank’s decision to lift interest rates to 3.85 per cent to accuse the federal government of failing to have a plan to fight inflation.
Speaking in Sydney this afternoon, Taylor said the central bank’s decision last month to pause the cash rate at 3.6 per cent “gave an opportunity to the government to demonstrate its inflation fighting credentials, and it has failed”.
“It is clear that we haven’t seen a clear plan from the government to deal with the inflationary pressures Australians in our country is facing,” Taylor said.
“We are leading the world and in exactly the wrong way with a core inflation rate of 6.6 per cent.
“Given that, it is not surprising that the Reserve Bank has made the decision that it has made today, which will inflict so much pain on so many Australians.”
Taylor said next Tuesday’s federal budget needed to deliver a surplus, which he argued was achievable.
“We’ve heard many economists in recent days saying it’s achievable and that budget surplus and ongoing budget balance, with an ongoing commitment to budget balance, is absolutely crucial to take pressure off interest rates and inflation because the harsh reality is if the government doesn’t balance its budget, households and businesses have to do the work for it.”
The Reserve Bank of Australia has dropped an interest rate surprise, taking it to an 11-year high.
On Tuesday, the RBA board lifted the cash rate by another 25 basis points to 3.85 per cent.
Use our mortgage repayment calculator below to see what Tuesday’s increase of 25 points (the left toggle button) means for your repayments.
Enter your loan amount, the length of your loan, your existing interest rate, then click the +0.25 per cent rise for the latest hike to get your extra monthly repayment.
Calculations are based on monthly fixed interest rate increases on principal loan amount excluding requisite monthly repayments, adjustments to repayment amounts, or additional repayment instalments.
Lenders make individual choices on what is passed on from the RBA so check with your lender.
A man who allegedly held Nick Kyrgios’ mother at gunpoint before stealing the tennis star’s car was denied bail in court in Canberra on Tuesday.
ACT Policing was called to a home in Watson about 8.30am on Monday after being told a man dressed in dark clothing allegedly threatened Kyrgios’ mother, Norlaila, with a gun before demanding she hand over the keys to the Tesla parked in the driveway.
Police said the man drove away in the car, however, Kyrgios was able to track the car’s movements via GPS tracking on his phone.
Police pursued the car for a short time before arresting the man at a home in Ainslie. The car was returned to Kyrgios.
The man, 32, was charged with five offences linked to the incident, including aggravated robbery, driving a stolen vehicle, furious driving, and failing to stop for police.
He faced the ACT Magistrates Court on Tuesday, when he was denied bail.
ACT Policing urged any witnesses, or anyone who might have dash-cam footage, to contact Crime Stoppers on 1800 333 000, or via the Crime Stoppers ACT website.
Treasurer Jim Chalmers said the Labor government was “very conscious” of the cost-of-living pressures facing young people, but stopped short of detailing relief measures in the federal budget.
Speaking after the Reserve Bank board’s surprise decision to lift the official cash rate by 25 basis points to 3.85 per cent – one week before the federal budget on May 6 – Chalmers said:
“We know that Australians, particularly vulnerable Australians, are doing it tough across the board … We understand that particularly people on payments [are] doing it tough and that’s why the energy bill relief is directed towards people on pensions.
“We understand that there are pressures coming from a range of sources on Australians, young and old, we’re cognisant of that, and we’ll respond to that in the budget.
Pressed on specific measures, Chalmers said: “Wait for the budget and see what’s in there.
“Am I particularly concerned about women over 55 finding it harder to get into the workforce? I am … [and] will there be cost of living relief which is broader than that that’s been speculated on? And the answer that is yes.”
Federal Treasurer Jim Chalmers says today’s interest rate hike is a difficult decision for Australians who are feeling the pain of cost-of-living pressures.
The Reserve Bank board has lifted the official cash rate from 3.6 per cent to 3.85 per cent in a surprise move just a week out from the federal budget. The increase is the 11th rate rise in a year.
Speaking in Canberra just now, Chalmers said: “This is a really difficult decision for a lot of Australians who are already under the pump.
“This is a reminder that inflation remains the primary challenge in our economy.
“This is a reminder of the difficult economic conditions in which we frame this second budget.”
Chalmers said next Tuesday’s budget would prioritise “responsible cost of living relief” that didn’t add to inflation.
“We know, and this interest rate decision today is a reminder of, the complex combination of economic pressures that are being felt right around the country.
“The budget will seek to alleviate some of that pressure at the same time as it positions this country to take advantage of the remarkable opportunities that lie ahead.”
Chalmers wouldn’t be drawn on specific budget measures before Tuesday, but said that “no government of either political persuasion can satisfy all the demands for new spending in the budget”.
“Typically in the lead up to the budget, and particularly the week before a budget, there’s always a lot of speculation.
“Often large swaths of that is accurate, and some of it turns out to be inaccurate, and so I would caution you against making assumptions about what is in not in the budget.
“I’d encourage you to see what we announce on Tuesday night.”