Australia news live updates: Gold Trip wins Melbourne Cup 2022; RBA lifts official interest rate for record seventh straight month

About half an hour before a certain horse race in Melbourne, we’ll get the Reserve Bank’s latest decision on interest rates at 2.30pm AEDT.

As noted in an earlier post, the surprisingly large CPI reading for the September quarter made a rise in the RBA’s cash rate a better wager than anything on four legs today. The main tension is how high will it go.

At the October meeting, the bank surprised most economists with a 25 basis-point increase that snapped a run of four “super-sized” hikes of twice that in a row. In cutting the pace of rises, the RBA became the first central bank to ease back.

But after the inflation jump (particularly for the underlying inflation rate – the trimmed mean – that the RBA watches closest), there’s a chance of something larger than a quarter point today.

A 40bp increase would split the difference, with the advantage of creating a neater number. A figure like 3% is a lot rounder than 2.85% or 3.1%, although aesthetics probably don’t loom large in the minds of the RBA board.

Either way, we’ll be matching or exceeding the 275bp increase in the cash rate during the second half of 1994 in terms of the fastest tightening by the central bank.

© Provided by The Guardian The Reserve Bank is set to raise interest rates today – but by how much? Photograph: Saeed Khan/AFP/Getty Images

Analysts such as Catherine Birch, a senior economist with ANZ, will be alert to changes in the accompanying explanation by RBA governor Philip Lowe.

Will it retain an emphasis about “keeping the economy on an even keel” or revert to stronger language, such as the need to “bring down inflation at all costs”, which has been the tone of some overseas counterparts, Birch says.

The ANZ and Westpac both pick the RBA rate peaking at 3.85% in the first half of 2023.

For a typical owner-occupier paying principal and interest with 25 years on the $500,000 mortgage to go, the rate rises (assuming they are passed on) since May to the peak would add $1,059 more a month to repayments, RateCity says.

Today’s pain, in other words, is unlikely to be the last.