Australia’s cash rate has risen to 4.85% for the first time since 2008, marking the fifth hike in seven RBA meetings this year as inflation runs above forecasts, underscoring renewed pressure on households.

With the cash rate at 4.60%, ongoing inflation pressures suggest the RBA has room to act again at the upcoming meeting, keeping financial conditions tight.

Experts advise moderating nonessential spending rather than cutting it out entirely, highlighting potential savings over the life of borrowers’ loans.

Coverage presents the decision as independent of government, while outlining potential economic and household impacts and the broader economy.

Treasurer Jim Chalmers says the vote on rate changes was expected to split and reflects uncertainty about the outlook and risks on both directions.

Economists say the policy aims to cool consumer spending and housing activity, with some sectors like data-centre construction and defence possibly growing but facing inflation pressure.

Hauser later clarified inflation expectations remain well anchored, walking back some earlier remarks.

Chalmers links higher rates to potential reductions in government spending in the mid-year budget update, with an expenditure review committee meeting planned to discuss savings options.

The government is reviewing spending pressures in preparation for the mid-year budget update as it considers options to temper inflation.

Inflation excluding petrol sits at 3.6%, suggesting energy costs and fuel drive price pressures more than domestic demand alone.

Readers are left considering whether to shift from ASX shares to term deposits given the current environment, without a definitive recommendation.

A ban on card payment surcharges could lift CPI by about 0.1% as merchants adjust prices, though timing is uncertain.