RBA rate hike looms as Tanya Plibersek and Barnaby Joyce clash over Australia’s GFC-level interest rates

Australians have spent years waiting for the light at the end of the cost-of-living tunnel.

But with another interest rate hike looming, Barnaby Joyce has delivered a grim assessment of what could be coming towards struggling households instead.

“It’s the light that they see at the end of the tunnel. Is the train coming to run them over?” he said.

The Reserve Bank begins its two-day meeting on Monday, with economists widely expecting another 25 basis point hike on Tuesday, taking the cash rate from 4.35 per cent to 4.6 per cent.

That would leave interest rates at their highest level since 2008, when Australia was staring down the Global Financial Crisis.

And there could be more pain to come.

Some economists have warned another increase could follow, potentially pushing the cash rate to 4.85 per cent, a level last seen during the GFC.

But while Australians grapple with mortgages, groceries, petrol and power bills, Tanya Plibersek insists the fundamentals of the economy remain strong.

“Well, nobody wants to see rates go up. We know that that adds to the pressure that families are feeling,” she said.

“So we’re doing our best as a government to make sure that we’re helping with cost of living pressures in a responsible way.”

Ms Plibersek pointed to cheaper medicines and increased access to bulk billing, while arguing international pressures, including the continuing US-Iran conflict around the Strait of Hormuz, were adding to inflation.

The RBA itself has identified both domestic price pressures and energy costs linked to the Middle East conflict as factors keeping inflation elevated. Its August forecasts did not expect inflation to return to the middle of its two-to-three per cent target until early 2028.

Ms Plibersek also defended the Government’s economic record, pointing to Australia’s credit rating, low unemployment and economic growth.

“I know that people are feeling pressure. I’m not trying to deny that they’re feeling the pressure,” she said.

But Mr Joyce argued Australians were being told the economy was strong while experiencing something very different in their own bank accounts.

He blamed government spending, debt and energy policy for adding to inflationary pressure and argued Australians were becoming poorer.

The pair then descended into a fiery argument over energy policy and the cost of renewable investment, repeatedly talking over one another as hosts attempted to regain control.

Behind the political blame game, however, sits a much simpler reality for mortgage holders.

The RBA has already increased the cash rate three times this year, from 3.6 per cent to 4.35 per cent.

If Tuesday delivers another hike, Australians waiting for that elusive light at the end of the tunnel may have to wait a little longer.