Australia’s cash rate has risen to 3.85 per cent, after the Reserve Bank increased the target by 25 basis points at its 3 February meeting.
The Reserve Bank said inflation has fallen from its peak but “remains above” the 2–3 per cent target range, and that the board is seeking to return inflation to target “in a reasonable timeframe”.
Overall sentiment: further pressure on household budgets and financial stress
Across public statements reviewed by STPL News, the dominant reaction from welfare and consumer support organisations was concern that higher rates will deepen financial stress, particularly for low and modest income households. Business representatives also warned the decision would hit confidence and compound cost-of-living pressures.
CPA Australia: “will hit households and small businesses hard”
In a statement responding to the decision, CPA Australia said the rate rise would “hit households and small businesses hard”, adding to existing cost-of-living pressures.
CPA’s Business and Investment Lead, Gavan Ord, said borrowers who had been encouraged by recent cuts would be “deeply disappointed”, particularly households coming off long-term fixed rates and now facing higher repayments.
CPA also warned some businesses may pass rising costs on to customers or reconsider investment and growth plans.
Financial Counselling Australia: more employed people seeking help
Ahead of the decision, Financial Counselling Australia (FCA) warned a February rate rise could be the “straw that breaks the camel’s back” for some borrowers already in mortgage stress, according to comments published by the ABC.
FCA chief executive Domenique Meyrick said demand for help was rising, including from employed, middle-income Australians. She cited National Debt Helpline data showing that in the past six months of 2025, 83,545 people called the service, with 30 per cent in full-time work and a further 14 per cent in part-time paid work.
Australian Council of Social Service (ACOSS): warned against further rate rises
In a 28 January statement responding to inflation data ahead of the RBA meeting, ACOSS Acting CEO Jacqui Phillips argued the figures did “not justify further interest rate increases” and said lifting rates would “increase financial stress” and threaten jobs.
ACOSS also said higher interest rates can raise unemployment and called for “direct support and targeted measures” to address price rises at their source.
The Salvation Army: debt and stress remain widespread
Separate research released during the Salvation Army’s 2026 Moneycare Week reported that 44 per cent of Australians would start 2026 in debt, and that almost nine in 10 respondents felt the same or more stressed about their finances compared with last year.
National Moneycare Manager Kristen Hartnett encouraged people under pressure to seek support, describing financial counselling as “free, confidential and effective”.
Local reaction: Somerville Business Group warns discretionary spending could tighten
David Livingstone from the Somerville Business Group Inc said local traders could feel the impact quickly, particularly through reduced discretionary spending.
This rate rise is not great timing, family budgets are stretched from Christmas overspend and kids returning to school means new books, uniforms etc
Livingstone said small businesses were already under pressure.
Interest rate rises normally hit discretionary spending first, which given the variety in our local shopping precincts will lead to some tough times ahead
He said small businesses should prepare early.
Small business should review all their overheads as soon as possible. Governments are expecting consumers to restrict their spending, it is time Federal and State Governments look at their spending
Mornington Peninsula and Frankston: housing stress backdrop
While the Reserve Bank’s decision is national, the impact intersects with local housing pressures.
A 2025 rental snapshot by Anglicare Victoria reported that in Frankston, five of 246 advertised rental properties were affordable for households on the lowest incomes assessed, while on the Mornington Peninsula, three of 351 properties were affordable, described as 0.9 per cent.
Where to get help
People experiencing financial stress can contact the National Debt Helpline on 1800 007 007, which operates nationally.
