As it happened: RBA hikes interest rates to 4.35 per cent; Xi says China and Australia have ‘worked out some problems’

Treasurer Jim Chalmers says he understands the rate rise will be difficult for mortgage holders, and that the government is doing its bit to reduce inflation.

The Reserve Bank lifted interest rates for the first time in five months this afternoon, ratcheting up the official cash rate by a quarter of a percentage point to 4.35 per cent.

“This will make life harder for people who are already doing it tough,” he said at a press conference following the RBA board’s decision to lift interest rates.

“Inflation has moderated in our economy since those peaks that we saw last year, and our economy has slowed. But inflation is still a feature of our economy.

“Now, the primary driver of inflation in the most recent data was petrol, but there are other inflationary pressures in our economy as well, [and] the Reserve Bank is responding to that.”

The treasurer said everyone wanted inflation to moderate further, and the government had the same goals as the Reserve Bank but a different job to do.

“The Reserve Bank’s job is to address this inflationary challenge without crunching the economy, I am focused on my job, which is a distinct and complimentary job when it comes to fighting inflation,” he said.

“Rolling out cost-of-living relief in a way that puts downward pressure on inflation, rather than add to our inflation challenge. We have got the budget in much better nick … [and] the first surplus in 15 years is part of that effort.”

The Reserve Bank has lifted interest rates for the first time in five months, ratcheting up the official cash rate by a quarter of a percentage point to 4.35 per cent.

Ahead of the Melbourne Cup Day board meeting, RBA governor Michele Bullock said the bank would not hesitate to raise rates again if the inflation outlook worsened.

If passed on in full by banks, Tuesday’s increase will add $101 to monthly repayments on an average $600,000 home loan, according to Canstar.

Since the RBA started lifting rates last May, those repayments have already risen by $1461 a month.

The big four banks all expected the RBA to raise rates on Tuesday after a higher-than-expected 1.2 per cent lift in inflation in the September quarter and strong retail spending figures.

The RBA wants to return inflation to its target band of 2-3 per cent by the end of 2025.

Thank you for your company this afternoon. Here are the day’s top stories:

• The RBA increased the official cash rate by a quarter of a percentage point to 4.35 per cent, the 13th increase since the bank started lifting rates in May last year

• Without A Fight won the 2023 Melbourne Cup at Flemington – and police pepper-sprayed and arrested Palestine protesters outside the venue

• Former high-flying start-up WeWork has filed for bankruptcy

• In NSW, embattled Transport Minister Haylen personally sought to limit release of documents about staffers, it has been revealed
• And in Victoria, sad details have emerged about what happened in the moments before the Daylesford crash.

See you tomorrow.

Political firebrand Drew Pavlou has voluntarily deregistered his political party after its membership fell below the required 1500 people.

The Drew Pavlou Democratic Alliance was deregistered by the Australian Electoral Commission yesterday.

24-year-old Pavlou, who has campaigned extensively against Chinese President Xi Jinping and his country’s policies against Uighurs, said they only gained about 5000 votes at last May’s federal election.

“We knew it would be extremely difficult to win seats but we formed a protest party dedicated to opposing close Australian business ties with the CCP,” he said on X, formerly Twitter, this afternoon. “No one gave us a chance but we managed to raise a lot of awareness for our chosen issues.”

“I think I need to spend time putting my own life in order and gaining a profession so that I will be able to support myself sustainably in the future.”

Matthew Knott wrote an interesting profile on the young activist earlier this year. Read it here.

Prime Minister Anthony Albanese has just been asked about the rate rise during a press conference in Beijing.

“We need to be engaged because we know that impacts of the global economy on energy prices, for example, feed through into the Australian economy,” he said.

“That’s why a major focus of this visit has been on Australian job creation, on the benefit that we can get by dealing with the impediments to our trade, which have been there. We’re very focused on Australian jobs and the Australian economy and Australian living standards, which is why we continue to have as our number one priority cost of living relief.”

Peter Hartcher’s opinion piece on how Australia had a choice with China to kowtow or stand up and made the right call is sparking much debate with subscribers.

@jk says: “Good balanced approach by Albanese. It’s good to finally see Australia chart a right balance between the big powers to the benefit of Australians, just like Singapore and NZ. A reasonable and mutually respectful relationship between two countries.”

@Stratos writes: “This is the first chapter in a long book which will test our resolve for decades to come. Beijing plays the long game while we stumble our way through policy shifts from election to election. Not sure President Xi has reversed anything.”

@Mick says: “Morrison could not have handled our fallout with China any worse if he tried. Let’s not pretend otherwise. It caused billions of dollars of damage to the Australian economy and the Liberal party should be reminded of this before every election.”

But @MacsDave has a different take: “About time a few journalists acknowledged the previous LNP government’s massive achievements in standing up to China in Australia’s national interest. Watching Albo and co in China with lobster in hand, getting praise for “repairing the relationship” speaks volumes re: the general public’s ignorance of the entire issue. It will be very interesting to see how Albo responds to a Chinese issue of the scale the previous LNP governments had to deal with (Huawei, list of 14 demands, Covid) … It looks like the Chinese have warmed him up nicely and following the Voice embarrassment, the Chinese would know that any damage to the China-Australia repair in relationship would be very damaging politically.”

What do you think? Let us know here.

Without A Fight has won the 2023 Melbourne Cup at Flemington today.

Sam Freedman, who trained Without A Fight with Anthony Freedman, said the result was “extraordinary”.

“He got him onto the rail from a wide gate, relaxed, swam him off and pretty confident probably the 800 metres he was travelling,” Freedman told Channel 10.

Meanwhile, Right You Are will be assessed by Racing Victoria’s veterinary team after failing to finish the race.

In other news, the Melbourne Cup is due to begin any moment.

You can follow our live coverage of the race here.