Australian home borrowers are being told to brace for at least four rate hikes during the coming year with the Reserve Bank expecting inflation to remain a problem into 2028. Australia’s unemployment rate was at just 4.1 per cent in February and May last year, when the RBA cut interest rates for the first time since late 2020. But when volatile items like soaring electricity, holiday accommodation and fresh food prices were taken out of the equation, underlying inflation last year climbed by 3.3 per cent. The Reserve Bank expected both headline and underlying inflation to only fall to 2.6 per cent by December 2027, in its November statement on monetary policy. Federal Government spending this financial year is expected to make up 27 per cent of the economy, adding to inflationary pressures.