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CANBERRA - The Reserve Bank of Australia (RBA) is expected today to increase the official interest rate to its highest level since the mid-1990s.
The RBA is expected to increase its key rate by a quarter of a percentage point to 7.25 per cent, a move which will add another A$50 ($59) to a monthly mortgage repayment on a A$300,000 home loan.
But it could be more if commercial banks move their mortgage rates by a greater margin, as some did last month after the RBA's last move.
Prime Minister Kevin Rudd has warned banks not to lift mortgage rates by more than the official rise.
"Banks experiencing record profitability should be very, very mindful of their corporate and community standing before leaning on people who borrow from those banks any further," he said.
The official rate rise is unlikely to be the last after new data showed inflation worsening.
National accounts figures out tomorrow are expected to show the economy was still humming along in the final three months of last year.
The TD Securities-Melbourne Institute Monthly Inflation Gauge rose by 0.3 per cent in February to 4.0 per cent over the year.
Underlying inflation also continued to increase, with the yearly trimmed mean measure of inflation rising to 4.1 per cent in February.
These readings are way beyond the RBA's two to three per cent inflation target. They follow an official consumer price index of 3.0 per cent and underlying inflation of 3.6 per cent in the December quarter.
- AAP
