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The RBA hiked the cash rate for the fourth time this year, to 4.60%.  It's the fourth hike this year and takes the cash rate to its highest level since 2011.

But despite the disappointment, the move wasn't a shock. All four major banks had forecast a hike ahead of the meeting.

So why did the RBA pull the trigger anyway?

At first glance, the latest inflation numbers looked like a case for holding.

Headline inflation eased to 3.5% in the year to July, down from 3.8% in June. That’s positive!

But underlying inflation, the measure the RBA watches most closely, held steady…and stubbornly at 3.6%.. Both numbers are still sitting above the RBA's 2 to 3% target.

On top of that, a fresh spike in global oil prices pushed diesel to around $3 a litre or more nationally, more than double where it started the year. That's exactly the kind of upside inflation risk Governor Michele Bullock had already flagged as a trigger for another move.

What’s on the RBA’s watch list?

Turns out the Reserve Bank is also side-eyeing three specific things happening around the world.

1. Governor Michele Bullock told a parliamentary committee that oil prices from the ongoing Middle East conflict are pushing petrol costs up directly, with no end to the conflict in sight.

2. Then there's the AI boom, yes, really, all that data centre investment is soaking up energy and driving up prices for tech that's already in short supply.

3. And finally, extreme weather, which keeps messing with food and energy prices in ways nobody can put a rate hike on hold for.

So what happens when the cash rate goes up?

If you've got a variable rate home loan, expect your repayments to climb again. Exactly how much depends on the size of your loan.

Savers, this one's actually in your favour. Some savings accounts pass on rate rises, so your interest earnings could tick up too, though it depends on the terms of your specific account.

Either way, don't expect breathing room soon. Most banks reckon cuts are still more than a year away.

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