CBA, ANZ, NAB, Westpac, Macquarie: Banks react to RBA interest rate hike

The Reserve Bank of Australia (RBA) raised interest rates earlier on Tuesday afternoon and now Australians are eagerly waiting for their own banks to follow suit.

At 2:30 p.m., for the fourth consecutive month, the RBA announced that interest rates were rising again.

The central bank raised Australia’s interest rate by 50 basis points, or 0.5%, bringing the cash rate down from 1.35 percent to 1.85 percent, broadly in line with economists’ forecasts.

Macquarie Bank was the first to pass on the rate hike, saying it would raise variable mortgage rates by 0.5% by August 12.

Rates on its savings and checking accounts also increased by 0.50%.

So far Australia’s four largest banks – Commonwealth Bank (CBA), ANZ, NAB and Westpac – have made no announcements about the latest rate hike, but they have been quick to shift the blame to customers over the past three months.

Since April, the cash rate has risen 1.75 percentage points, following four consecutive months of hikes by the central bank.

And August’s hike is unlikely to be the last, with economists predicting interest rates could peak as high as 2% by the end of the year.

Tuesday’s rate hike means those paying off the average home loan of $500,000 will have to shell out $140 more per month.

Westpac last month gave customers the most time to prepare for a change to its variable mortgages and also its savings rates, taking two weeks for the change to take effect.

The other three banks communicated the change to customers within 10 days.

Tuesday’s decision marks the first time the RBA has raised rates for four consecutive months since the introduction of the 2-3% inflation target in 1990, a sign of the inflation crisis and the cost of life across the country.

This follows the rise in annual inflation last week, which hit 6.1%, its highest level in 21 years since 2001.

Tuesday’s rate hike means those paying off the average home loan of $500,000 will have to shell out $140 more per month.

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