The big four banks have moved to pass on the Reserve Bank's interest rate rise to mortgage borrowers in full.

The RBA this week announced a raise in the cash rate from 0.35pc to 0.85pc. 

The Commonwealth Bank, ANZ, NAB and Westpac announced soon after that they would raise home-loan variable interest rates by half a percentage point from June 17.

The RBA has hiked interest rates for the second time in two months, this time with a larger than expected half a percentage point increase.

The rate rise is the biggest since 2000, taking the cash rate target to 0.85 per cent in an attempt to curb surging inflation.

Cost of living in Australia is up 5.1 per cent over the past year, driven largely by global supply chain disruptions and the war in Ukraine.

Reserve Bank governor Philip Lowe says inflation is expected to increase further, but decline back towards the 2-3 per cent target range next year. More rate hikes have been predicted before then.

“Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago,” he said in a statement after an RBA meeting on Tuesday.

Other central banks such as the US Federal Reserve, the RBNZ and the Bank of Canada have all announced similar moves. 

It is expected that the full rate rise will be passed on to borrowers, but not savers.

Following the last rate hike in May, the banks were quick to increase home loan rates, but two out five banks did not touch their savings rates.