The Reserve Bank of Australia has lifted the interest rate for the fifth month in a row.

Rates have lifted by 50 basis points.

This brings the new cash rate to 2.35%.

Shane Oliver, Chief Economist at AMP told Oliver Peterson on Perth Live that the rate hikes aren’t working as of yet.

“We saw this in the late 1980’s, early 1990’s, the Reserve Bank raised interest rates and kept going and going, initially there was no impact and suddenly it all came in with a bang and we ended in a recession,” he told Oly.

“It always operates with a lag – they’ll end up with overkill and knock the economy into a recession and we will soon be talking about inflation being too low and unemployment being too high.”

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