Reserve Bank governor warns mortgage holders more interest rate pain could be weeks away

Australian mortgage holders are bracing for more financial pain with the Reserve Bank of Australia (RBA) warning interest rates could rise again as early as the end of the month.

RBA Governor Michele Bullock has told Parliament that inflation remains too high and will stay that way for some time, refusing to rule out another rate hike at the bank’s next meeting on September 29.

Bullock said something must be done about rising inflation or the cost of living will continue to get worse for Australians.

She said the key question for the board is whether the three rate hikes already delivered this year will be enough to bring inflation down from its current level of 3.5 per cent to under 3 per cent.

Bullock says the full effect of those earlier decisions is yet to be felt.

“But reducing inflation is essential. High inflation hurts all Australians,” she said.

Both Bullock and Treasurer Jim Chalmers said inflation is being fuelled by the war in the Middle East, with petrol prices potentially hitting $2.60 a litre soon.

Chalmers was blunt in his assessment: “From an economic point of view, the war in Iran has been a disaster.”

Bullock echoed that sentiment, but said the government should be taking counter measures to combat inflation.

“This Middle East shock has made us poorer. We can’t respond to that by letting inflation get out of control,” Bullock said.

“In fact, it’s more important than ever that we bring inflation back to target.”

Other factors driving inflation include the artificial intelligence (AI) and data centre construction boom.

The treasurer is predicting a tech revolution that will be profound across the next four decades.

“It will be the defining influence on our economy and our prosperity,” Chalmers said.