By Poppy Johnston in Canberra

SOFTENING rhetoric from the Reserve Bank governor suggests the rate hiking cycle is drawing to a close after Australia’s central bank bumped up interest rates for the 10th time in a row.

The Reserve Bank on Tuesday lifted the official cash rate by another 25 basis points, taking it to 3.6 per cent.

The increase will pile more pressure on mortgage holders, who are feeling the heat from increasing costs.

The hike will add more than $1000 to the average monthly mortgage compared with repayments in April 2022, Finder analysis shows.

The Reserve Bank has been lifting interest rates aggressively to tackle inflation, which came in at a hotter-than-expected 7.8 per cent in the December quarter – its highest level since 1990.

In a statement accompanying the rates decision, RBA governor Philip Lowe signalled further moves to stymie inflation but softened his language on future increases.

“The board expects that further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary,” he said.

City Index senior market analyst Matt Simpson said this represented an evolution from the language used last month – when Dr Lowe said “further interest rate increases would be needed” – and could signal the end of the tightening cycle was closer.

“Of course, a final 25 (basis point) hike is far from certain at this point, but the main takeaway for me is that the RBA have removed a key hawkish sentence from the February statement,” he said.

The RBA governor also pointed to Australia’s slowing economy, strong but easing labour market and recent data that showed the risk of prices and wages chasing one another was decreasing.

Dr Lowe said inflation had likely peaked as indicated by the monthly consumer price index, which grew 7.4 per cent in the 12 months to January.

Treasurer Jim Chalmers agreed inflation had likely passed its highest point.

“But it will be higher than we’d like for longer than we’d like,” he told parliament on Tuesday.

Dr Chalmers said the government would take responsibility for the areas of inflation it could control.

“And our three-point strategy is all about, as we’ve said before, cost-of-living relief, repair of supply chains and restraint in the budget.”

Shadow treasurer Angus Taylor said the government was putting more pressure on households by raising taxes and that Labor should instead be looking to rein in.

“The government has to rein in their spending or households will have to do it for them,” he said.

The latest rate rise was met with concern from business groups and unions, with some worried the bank risked hiking too much.

Australian Chamber of Commerce and Industry boss Andrew McKellar urged the RBA to pause and take stock of what was happening in the “real economy”.

“I have to say, we are getting very close to the point where enough is enough,” he said.

The Australian Council of Trade Unions secretary Sally McManus said the rate rise would punish mortgage holders and renters when big businesses were responsible for inflated prices.

“Working people are being punished for a problem they did not cause,” she said.

Some economists are also worried the RBA was putting too much pressure on households and risked pushing Australia into a recession.

Deloitte Access Economics head Pradeep Philip said supply side factors were largely responsible for the country’s elevated underlying inflation.

He said the RBA had only one tool to fight inflation and urged the government to consider a greater role for fiscal policy.

“In the meantime, the RBA should pause rate hikes, or it will overshoot and cruel the economy,” he said.