MORTGAGE repayments are expected to climb again for millions of Australians after the Reserve Bank of Australia increased the cash rate.
The bank's Tuesday meeting concluded to lift the rate by 50 basis points, taking it to 85 basis points.
It is the second rise in as many months, following a 25-point hike in May.
Governor Philip Lowe noted in the decision that inflation has "increased significantly".
"While inflation is lower than in most other advanced economies, it is higher than earlier expected," he said.
"Inflation is expected to increase further, but then decline back towards the 2-3 per cent range next year."
Electricity and gas prices, as well as petrol, have also accelerated inflation faster than expected a month ago, he said.
"Today's increase in interest rates will assist with the return of inflation to target over time," Mr Lowe said.
"The Australian economy is resilient, growing by 0.8 per cent in the March quarter and 3.3 per cent over the year. Household and business balance sheets are generally in good shape, an upswing in business investment is underway and there is a large pipeline of construction work to be completed.
"One source of uncertainty about the economic outlook is how household spending evolves, given the increasing pressure on Australian households' budgets from higher inflation.
"The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labour market."
