When interest rates were increased by a quarter of a percentage point last month, it represented the first rise since 2010.
Currently sitting at 0.35 per cent, the interest rate is at its highest point since March 2020, when it was half a per cent, having just risen off the all-time low of 0.10 per cent.
Further interest rate hikes are expected in a matter of days, stoking fears of higher mortgage repayments and causing some of the older generation to cast their minds to the troubling days of the late 1980s and early 1990s.
ANZ updated its interest rate forecast this week, saying it is now expecting the Reserve Bank of Australia (RBA) to hike rates by 0.40 per cent, to 0.75 per cent.
Read more from Daniel Paproth:
What happened in the 80s and 90s?
On October 20, 1987, stock markets around the world suffered a severe crash, in what has been dubbed Black Tuesday in Australia and New Zealand.
It followed a period of financial excess and prosperity, one that Ian Macfarlane, governor of the RBA from 1996 to 2006, later said made a recession in the early 1990s "inevitable".
Fuelled by Black Tuesday, the late 80s and early 90s saw commodity prices and consumer demand begin to decline, while debt and interest rates increased, and Australia tumbled into its worst recession since the Great Depression.
Famously in November 1990, then treasurer and future Prime Minister Paul Keating declared it "the recession Australia had to have".
"The recession started in the September quarter of 1990 and lasted until the September quarter of 1991," Macfarlane said in 2006.
"During the recession, GDP fell by 1.7 per cent, employment by 3.4 per cent and the unemployment rate rose to 10.8 per cent. Like all recessions, it was a period of disruption and economic distress."
Interest rates hit scary highs
It was on January 23, 1990 that the interest rate was increased to its record, all-time high of 17.5 per cent.
This was, according to Peter Martin, a now-father of three who had just bought his first home at the time, a devastating blow.
"When we first bought, interest rates were about 12 per cent and within a few years they hit 17.5 per cent," the 59-year-old recalls.
"I owned my own mobile mechanic business and I had to give it away, because I couldn't afford to make the mortgage repayments and keep up with the increasing cost of living.
"When interest rates hit 17.5 per cent it put an extra couple of hundred dollars onto people's bills, which at the time was a lot of money, particularly when there was no talk of wage growth.
"Prior to that we were just managing to keep our heads above water, but when the rate kept going up and up - it was nothing to see an increase every month of a quarter or half a per cent - it became hard to make ends meet.
"We were lucky to have very generous parents, my mother would often stop by, quietly take one of our bills from the fridge and pay it without us realising until she'd left.
"At the time it felt like there was no light at the end of the tunnel. Us and everyone we knew were constantly getting reminder or disconnection notices, and we were living week to week and pay check to pay check.
"Eventually for us, it was sell the house or sell my business."
Martin says the problems were exacerbated by greedy banks, who "made hay while the sun shone" and took advantage of middle and lower-income families.
"One of the big stresses at the time was around when you took out your mortgage," he says.
"If you took it out one day, you'd be capped at 13 per cent. If you were unlucky enough to take it out the day after there was no cap, and we fell into that bracket. For months on end, our monthly repayments kept increasing.
"Slowly the interest rates were decreased, but whilst the banks were very quick to pass on the full hike when interest rates were going up, they were very slow to pass on the cuts, and more often than not they didn't pass on the full cut.
"So there was this small glimmer of hope in interest rates dropping, but it barely made a difference because the banks wouldn't pass on the full cut.
"There was a lot of anger at the banks at the time, and I think that anger was the start of what led to the banking reviews and eventually the Royal Commission."
What about where interest rates are headed now?
Rising interest rates have been a big talking point in recent months, with former Prime Minister (PM) Scott Morrison going toe-to-toe with new PM Anthony Albanese over the cost of living in the lead-up to the election.
Albanese said May's interest rate rise made had it "harder for millions of Australians to make ends meet".
"Even before today's decision Australians were facing a full-blown costs of living crisis on Scott Morrison's watch," Albanese said. "His economic credibility was already in tatters, now it's completely shredded.
"After almost a decade of this Liberal-National Government, the costs of essentials are out of control, real wages are falling, and now interest rates are rising by a quarter of a per cent. Everything is going up except wages and now interest rate rises are part of the pain."
Laura Elise, a homeowner in Brunswick in Melbourne's inner north, counts her lucky stars that she and her husband are in a fortunate position, but is fearful of what rising interest rates could mean for others.
"If they continue to rise I would likely have to make more lifestyle changes, but unless we’re seeing 1990s mortgage rates, I don’t think I’ll be at risk of losing anything or making any really tough calls about necessities," she said.
"I’m privileged. My partner was lucky enough to have some money left to them by a grandparent – which made purchasing a property possible and our mortgage reasonable. We would be years away from even thinking about buying if it weren’t for that.
"The current increase to our mortgage repayments is small. And as we’re paying off principle, we’re okay and have room to move. The cost of living increases are noticeable and have led me to make some cuts in certain places, but I'm not having to decide if I can eat or house myself.
"I am really concerned for people on lower incomes and our appallingly low welfare payments."
As the cost of living increases, Elise says governments can be doing more to support people to crack into the housing market.
"I really don’t think accessing super is a good idea. That basically just seems like a way to create a future aged population entirely dependent on the pension," she said.
"I think we should build more public housing, and raise Centrelink payments. Introduce rent to buy schemes and stop making housing such an attractive investment opportunity.
"Rents are exorbitant, and some cities are lacking rental properties entirely. People are lucky if they can afford to rent, let alone saving the ridiculous figure required for a deposit."