RBA interest rates live updates: Reserve bank primed for back-to-back mortgage blows for suffering homeowners

The S&P/ASX200 has managed only single-digit gains after the first few hours of trade as investors await the outcome of today’s decision on official interest rates by the Resreve Bank.

The local bourse was up just 8.2 points to 8591.6 at 1pm AEDT.

The market has been on a rollercoaster ride over the past two weeks as buyers and sellers get used to conflicting reports about the war in Iran.

Only gains by real estate, mining, banking and utility stocks was keeping the ASX’s head above water.

IT stocks lost one per cent, consumer discretionaries tumbled 0.9 per cent and health care companies shed a similar margin.

Gold miners made up the bulk of the top-five performers, with Pantoro Gold, West African Resources, Ora Banda Mining and Catalyst Metals adding between 5 and 10.5 per cent.

Online retailer Temple and Webster was the biggest loser, dropping 8 per cent. New Hope Coal, Zip Co., Lynas Rare Earths and Pro Medicus were also among the top-five laggards.

Westpac boss Anthony Miller says the recent oil price shock is adding to a complicated picture for the Reserve Bank as it navigates inflationary pressure.

Markets have very quickly repriced, underscoring how the outlook has changed and toughening the RBA’s role, Mr Miller told a banking summit in Sydney yesterday.

“Things have moved very fast,” Mr Miller said. “This war and its disruption to the global energy supply chain is a further challenge,” with other factors already nudging inflation expectations higher, he said.

Money markets are pricing a two-in-three chance of a hike today and see more tightening to come.

On Sunday, Treasurer Jim Chalmers warned Australia’s inflation rate could exceed 4.5 per cent as oil prices climb. The RBA targets inflation at the midpoint of its 2 to 3 per cent band.

Despite the elevated projections for further hikes in Australia, it remains “remarkable” how well people are navigating this environment, he said. Non-performing loans are “the lowest we’ve seen for some time”.

Major fuel suppliers, independent retailers and automotive associations have been hauled into an emergency meeting with the consumer watchdog after prices spiked at the bowser following the war in the Middle East.

“The ACCC are hauling the petrol suppliers and retailers in for an explanation,” Federal Treasurer Jim Chalmers said.

“Some of the steep increases in petrol prices we saw shortly after the outbreak of this conflict have really raised concerns at the ACCC..”

Among those requested to attend are Ampol, the NRMA, BP Australia, and 7-Eleven.

The Government has insisted Australia’s supply is secure despite reports of skyrocketing prices and shortages at petrol pumps in rural and regional areas.

A crackdown on price gouging was subsequently announced last week.

Read more here.

Stagflation is the economic equivalent of a double whammy.

On one hand, you have rising costs for everyday goods and services (which won’t be helped by the Middle East conflict and the choking of global oil supplies which - despite US President Donald Trump’s assertions that the war is “very complete, pretty much” on March 9 - still rumbles on).

On the other is slow economic growth. That’s us.

Australian Bureau of Statistics data out earlier this month showed gross domestic product grew at 2.6 per cent in 2025 - the highest rate in nearly three years.

Despite the uptick in activity, economists warn the economy is not in rude health.

Given growth was not driven by productivity improvements, it indicated it would likely worsen inflation, BDO chief economist Anders Magnusson said at the time.

“The release includes a concerning signal about productivity,” he said.

Stagflation is a central bank’s worst nightmare, essential because the usual tools used to fix one problem can make the other worse:

The May Federal Budget may include more government spending to address cost-of-living pressures, Finance Minister Katy Gallagher said, as householders brace for another rate rise today.

“If there is another interest rate increase, it will hit households hard,” Senator Gallagher told ABC News Breakfast on Tuesday morning.

“Our focus will always be on how do we address cost of living, and how do we finalise and put those finishing touches on the budget that will be handed down in May.”

She was asked directly if the Government would provide more targeted measures to help Australians cope if rates go up.

“The Government will make those budget decisions based on the economic circumstances at the time,” she said.

“Obviously there’s uncertainty and volatility particularly in the global economy based on some of the events in the Middle East, so, that presents some challenge.

“But we will always make those made on what we need to do for the current situation.”

The is already under fire from the opposition over its spending and its impact on inflation.

The chart below shows the rollercoaster ride endured by homeowners over the past four years.

From record low official rates of 0.1 per cent at the height of the coronavirus pandemic to one of the harshest money-tightening cycles in a generation.

With even Treasurer Jim Chalmers tipping inflation is expected to rise above 4 per cent, is history about to repeat itself?

Struggling to be heard over the din of punters shouting about a rate hike are analysts from investment banking giant JP Morgan, who aregue there’s a case to hold.

Many minds were changed on the possibility of a hike today after commentary that came courtesy of a hawkish podcast appearance by RBA deputy governor Andrew Hauser last week.

But JP Morgan economists Ben Jarman, Tom Kennedy and Tom Ryan thought his remarks were more balanced than the market appeared to interpret, highlighting “arguments on both sides”.

The trouble for the RBA is the conflict will cause prices to rise at the same time as it will push down economic growth - a stagflationary event.

This is different to the post-COVID inflation spike, in which the energy supply shock from Russia’s invasion of Ukraine interacted with high global growth, meaning there was less of a risk to employment, which the RBA has to manage as part of its dual mandate.

By assuming the RBA would take a more hawkish approach this time around, markets were ignoring the inherent differences between the two cycles, the JP Morgan trio said in a research note.

“There is ... a sense that markets assume central banks will attempt to fight the last inflation war, keen to demonstrate vigilance after 2022’s experience,” the three JP Morgan economists said.

“That episode was somewhat different, however, in that it was not a pure supply shock, with global growth running at five per cent.

“The implications for growth seem straightforwardly negative if a firmer than usual stance is taken to what is a more conventional supply shock this time.”

RBA governor Michele Bullock had warned homeowners that March was “live” for a rate hike well before the first bomb was dropped on Iran.

“Live” is still no certainty that the board will eventually act, but it’s a strong signal that its members are worried about inflation running too hard, too fast.

Even so, only a third of market watchers expected the RBA to hold fire in March before lifting official rates 25 basis points to 4.1 per cent in May.

But last week’s spectacular surge in petrol prices, growing fuel supply fears as the war rages on and the resulting ripple effects across the entrie economy have moved the needle.

All four of Australia’s big banks now expect two consecutive rate rises and two-thirds of those market punters now agree.

But there’s still some quiet corners of the market that say the RBA is not quiet ready to pull the trigger, despite suggestions it wants to avoid making the same mistakes of the COVID era.

But at the end of the day, the RBA has but one level to pull - and that’s to stop households spending but shifting more of their income into mortgage repayments.

It’s a disproporionaty unfair system, especially given those same household are also being hammered at the pump.

But Bullock and Co. won’t hesitate to inflict more pain today in the name of economic stability.

It’s not a done deal yet ... but anyone with a mortgage would do well to remember the proverb: hope for the best, plan for the worst.