RBA Assistant Governor Defends Rate Hikes Amid Homeowner's Mortgage Struggle

A 60 Minutes interview illustrated the pressure on Australian households as mortgage repayments rise. Sydney resident Vanessa Merryweather, who had previously built a home with a $60,000 redraw balance, said she may need to sell her house in January if further interest-rate increases are implemented.

The program then questioned RBA Assistant Governor Dr Sarah Hunter about the central bank’s strategy of using rate hikes to tame inflation while household spending has stalled and government expenditure remains high. Dr Hunter emphasized the RBA’s independence, noting that “government spending is a part of demand” and that the board’s mandate is to bring inflation back to a low, stable level.

She acknowledged the hardship caused by higher rates, stating, “It does weigh on us here… we have to get inflation out for the good of everybody.” Dr Hunter explained that interest rates are the most effective tool available, citing past attempts at wage freezes and credit-growth targets that proved less successful.

Analysts anticipate another cash-rate increase in November, with markets pricing a 64% chance of a 0.25-percentage-point rise to 4.85%. The upcoming Australian Bureau of Statistics inflation report is expected to show headline inflation near 4.2% and trimmed-mean inflation around 3.6%, reinforcing pressure on the RBA to act.

Economists warned that higher rates could add further strain to businesses and financial markets, with AMP deputy chief economist Diana Mousina noting a shift toward “a broader repricing of interest rates, inflation and risk premium.”