The RBA has, much as expected, raised the cash rate by .25% to 7.25%, effectively adding $50 to a monthly mortgage repayment on a $300,000 home loan. And there’s pressure on interest rates in the money markets, which the major banks haven’t much choice but to pass on, so keep watching for the possibility of more bad news…

And for the RBA it’s all about inflation and in the news circuit bloomberg.com reports “Prices surged 4 percent in February from a year earlier, breaching the 3 percent limit of the Reserve Bank of Australia’s target, according to a monthly gauge released by TD Securities Ltd. and the Melbourne Institute in Sydney today.” - bloomberg

And there isn’t much to indicate that inflation is going to be heading downwards anytime soon - “Runaway oil prices roared higher on Monday to strike a record high 103.95 dollars per barrel, as traders reacted to the plunging US dollar amid expectations that OPEC will hold output this week.” AFP

The rising Australian dollar helping keep the cost of this black gold down but also to be taken into account is the rising cost of housing, food stuffs and like a boomerang that iron ore etc.etc. we love sending to China is on the up supplying more cash to our over-cashed economy while we wait for China to send that price rise back in the cost of our imports.

No need for a summit with all the ideas around for solving this global inflation issue:

In the US, albeit different circumstances but they do have a cracking inflation rate - “In his testimony last week, Bernanke said Fed officials were watching inflation developments closely but still believed that the slowing economy would dampen inflation in the months ahead.” - AP

In the UK - “Mervyn King, the Bank of England governor, has warned that living standards are under serious pressure. Nominal increases in earnings will be hit by higher inflation and by a rising tax burden; public services face a spending squeeze not seen since the 1990s.” - FT

In Australia - “An Economist who is set to become a key adviser to Kevin Rudd has warned that Australia will have to sacrifice economic growth to beat inflation.” The Age

Also in Australia - “Inflation is a serious illness of mismanaged economies. To stop inflation in Australia now requires resolute action. The Reserve Bank should announce a 50-basis-point rate hike today.” Henry Thorton

Most interesting - “The real answer to inflation now in the world is a collapse in economic growth in their economies or better, in China. That is a sentiment that one may not hear in public often, if at all. But, China’s growth slowdown would be a godsend to the rest of Asia and to other nations outside of Asia, too.” WSJ - V. Anantha Nageswaran

I’d rather use the word contraction….

And, back to the street level, where is housing affordability and the potential homebuyer that’s left with rising rates and record home prices - apparently, sit tight as Rates hikes give rise to housing spin…

And what for the currently mortgaged Australian home owner? Count every penny and make every penny count..