In a statement, RBA governor Philip Low said that the Board is committed to returning inflation to the 2–3 per cent range over time.

"It is seeking to do this while keeping the economy on an even keel. The path to achieving this balance is a narrow one and clouded in uncertainty, not least because of global developments. The outlook for global economic growth has deteriorated due to pressures on real incomes from high inflation, the tightening of monetary policy in most countries, Russia's invasion of Ukraine, and the COVID containment measures and other policy challenges in China," he said. 

"Inflation in Australia is the highest it has been since the early 1990s and is expected to increase further over the months ahead. Global factors explain much of the increase in inflation, but domestic factors are also playing a role. There are widespread upward pressures on prices from strong demand, a tight labour market and capacity constraints in some sectors of the economy."

"Inflation is expected to peak later this year and then decline back towards the 2–3 per cent range. The expected moderation in inflation reflects the ongoing resolution of global supply-side problems, recent declines in some commodity prices and the impact of rising interest rates. Medium-term inflation expectations remain well anchored, and it is important that this remains the case. The Bank's central forecast is for CPI inflation to be around 7¾ per cent over 2022, a little above 4 per cent over 2023 and around 3 per cent over 2024."

Reflecting on the decision, Legal Home Loans director of sales Cullen Haynes said that today’s cash rate increase is the fourth large increase in a row and that LHL expects that most banks will pass it on to borrowers within the week.

It is not clear at this time, he mused, what further increases are expected for the year.

“Anyone concerned about rising mortgage repayments and impact on household budgets should speak to their bank or broker regarding fixed rate options if not done so already,” he suggested.

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“Mortgage holders locked into historically low fixed rates should be aware that there will be a significant increase in repayment when their fixed term ends which they may want to start budgeting ahead of time for.”

For those seeking new loans, Mr Haynes went on, borrowing capacity will be decreased, as banks factor a higher servicing rate into household affordability when assessing home loan applications.

“It is now more important than ever to gauge borrowing power as well as obtain pre-approval to confirm a purchasing budget before looking at properties this spring buying season,” he said.