The era of cheap money is over.
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Tuesday's hawkish 25 basis point jump in the official cash rate to 0.35 per cent by the Reserve Bank has signified the first time in almost 12 years monetary policy levers were tightened.
And there is more to come.
Interest rates are now heading upwards with multiple hikes expected over coming months likely to see the cash rate rise above 2 per cent, and add additional pressures for borrowers.
The RBA outlined it was time to withdraw pandemic settings, flagging a resilient economy that is heading for unemployment lows of 3.5 per cent.
But the big issue revealed by the RBA is ongoing forecasts that the recent high levels of inflation seen within the economy will persist through 2022.
RBA Governor Philip Lowe in his statement noted headline inflation will sit above 6 per cent over the coming months.
This will have far reaching consequences beyond borrowing, with inflationary pressures to further hit the prices of goods and services. Meaning fuel, food and other staples will garner heftier price tags.
Sustained levels of high inflation also prompt concern over how much faster and sharper monetary policy will need to be tightened to curb upward price pressures.
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While the RBA is independent and its decision to bump up rates will be in response to the current economic temperature, there is a big question about whether cost of living packages offered by both parties will stack up in a high inflation environment.
Labor is pledging big energy, childcare and health care polices to ease price pressures on Australians.
But in an environment where borrowing costs are rising, there is speculation if any savings would remain once interest repayments gobble up the spare cash.
The Coalition in the budget announced one-off payments and a six month cut to the fuel excise tax, however no new policies to combat the broader issues of inflation have yet been unveiled.
The RBA in its statement also alluded domestic supply constraints were fuelling the excessive inflation felt in Australia.
"Domestic capacity constraints are increasingly playing a role and inflation pressures have broadened, with firms more prepared to pass through cost increases to consumer prices," RBA Governor Philip Lowe said.
Dr Lowe's comments place onus on what role the next government will have to play in easing the issues of supply chains across the economy.
It is unclear if either party will address this crucial factor influencing inflation, or even if government has the ability to fix the bottlenecks.
But the ongoing cost of living debate fuelling this election has shifted up a gear.
