A rising tide

By Sheree Hoddinett 

For many Australians, the latest interest rate rise didn’t exactly come across as breaking news. It landed as a feeling, that unavoidable familiar tightening in the chest when another cost-of-living pressure arrives, uninvited and with no choice but to accept the outcome. 

When the Reserve Bank of Australia lifted the cash rate by 0.25 percentage points last month, it did so with a clear message: inflation remains stubborn, and the fight to bring it back under control isn’t over. But beyond the economics, the decision ripples through kitchens, lounge rooms and bank accounts across the country. 

RBA Governor Michele Bullock acknowledged the impact this rise would have in plain terms. 

“Based on the data we’ve seen and the conditions here and around the world, the board now thinks it will take longer for inflation to return to target and this is not an acceptable outcome,” she said. “I know this is not the news that Australians with mortgages want to hear, but it is the right thing for the economy.  “I said in December that the board had been alert to signs of a pick-up in inflation and we cannot allow inflation to get away from us again.”  

Everyone knows it’s a statement that makes sense on paper. But in real life, it’s a harder pill to swallow, especially for families (like mine!) already running their budgets on little more than hope and careful planning. 

For mortgage holders, especially those on variable rates, the impact was immediate. Another rate rise means another recalculation: how much extra comes out each month, what gets cut back, and what gets postponed yet again. For some families, it’s the weekend sport fees or a long-planned holiday. For others, it’s dipping into savings or putting off much needed medical needs or even home repairs. 

There is a growing sense among borrowers that they are doing much of the heavy lifting in the fight against inflation. Many households have already absorbed years of rate increases, rising grocery bills and higher energy costs. The latest rise may be smaller than those that came before, but its timing, amid persistent cost pressures, doesn’t lessen the sting.  

Renters, often left out of the rate-rise conversation, feel the effects in quieter but equally damaging ways. Higher interest rates can mean higher rents, as landlords attempt to cover increased mortgage repayments. In already tight rental markets, tenants have little room to push back. 

For renters, there is no offsetting benefit, no higher savings returns, no asset rising in value, just the risk that the next lease renewal will come with an unwelcome surprise. It’s a reality that hits younger Australians, single parents and lower-income workers hardest, widening the gap between those who own property and those who don’t. 

Pensioners and retirees occupy a more complicated space. For some, higher interest rates bring relief. After years of watching savings earn next to nothing, better returns on deposits offer a modest improvement in income. But that silver lining is thin for retirees who rent or rely heavily on the age pension. Rising housing costs, medical expenses and everyday bills continue to erode fixed incomes. For them, higher interest rates don’t feel like a boost, they feel like another reminder of vulnerability. 

Treasurer Jim Chalmers acknowledged the strain many Australians are already under, while highlighting what lay ahead.  

“This will be difficult news for millions of Australians with a mortgage and we understand the pressure that this will put on families and businesses,” he said. “We know many Australians are doing it tough, which is why we continue to roll out responsible cost-of-living relief, including a further tax cut later this year and another one next year.”  

Opposition figures, meanwhile, were quick to frame the rate rise as evidence of broader economic missteps, arguing households are paying the price for policy failures. 

Caught in the middle are ordinary Australians, trying to make sense of decisions made far from their daily routines. Interest rates are a blunt instrument, effective, but unforgiving. They don’t distinguish between families who are already stretched and those with room to move. They don’t account for renters with no savings buffer or pensioners with rising rent. 

The challenge now is not just about inflation numbers and economic forecasts. It’s about how long households can keep absorbing these pressures before the strain shows up elsewhere, in mental health, in spending confidence and in trust that the burden is being shared fairly. 

Another rate rise may be justified in economic terms. But for many Australians, it feels less like policy and more like yet another reminder that the cost of stability is being paid for at home.