The big four banks were like greyhounds out of the boxes in raising home loan interest rates by 0.25%, to mirror the surprise 0.25% hike in the cash rate of interest that the Reserve Bank uses to influence other interest rates and the economy.

RBA boss Dr Phil Lowe shocked the majority of economists who expected a 0.5% rise in the cash rate, though the CBA’s economics team tipped it late last week and I did suggest to the Governor that he needed a ‘Bud Fox’ moment.

My thinking there went back to the movie Wall Street, when fledgling stockbroker Bud Fox snared a lucky meeting with the huge market player Gordon Gekko, and as he went into the office, he said to himself: “Life comes down to a few moments. This is one of them.”

After having a shocker with his ‘rates won’t rise until 2024’ suggestion (Dr Phil never actually said this but this is what many borrowers thought they heard or read), he needs to beat inflation without sending us into recession.

Dr Phil’s decision, along with his board, is a big call. While I think it’s a good one, we both could be wrong. For his sake and the sake of borrowers, businessowners and the workforce who prefer to be employed, I hope it’s the right call.

I know it looks like the banks are like jackals descending on dead meat (i.e., the rates-crushed borrower) with their prompt rate increases, it is what the doctor and the RBA have ordered.

They need us to spend less. Raising monthly repayments is the way to do it but now we must play our part in helping bring inflation down. Consumers must spend less and demand lower prices from businesses or else they should refuse to buy. Businesses with pricing power, such as airlines, must price less opportunistically.

The banks are playing a fairer game, with savings rates of interest on the way up faster than previous rate-rising events from the RBA. By the way, higher saving implies less spending, and that’s good for beating inflation.

The AFR reminded us that Macquarie is becoming the leader in offering higher rates to savers, which is a clever brand-building play. “Macquarie Bank continued its generosity towards savers, increasing the ongoing interest rate on savings and everyday transaction account balances up to $250,000 by 0.45 of a percentage point, with its mortgage rates also set to increase by a quarter of a point,” reported Ayesha de Kretser.

Dr Phil is watching overseas developments with the recession threat there growing, but he’s not ignoring the RBA’s slug to household budgets. “Higher inflation and higher interest rates are putting pressure on household budgets, with the full effects of higher interest rates yet to be felt in mortgage payments,” yesterday’s RBA statement admitted. And data shows those first home buyers with loan arrears are climbing faster than other borrowers. “First home buyers, many of whom purchased property at the height of the market and have not had time to make significant down payments or build equity, are more than twice as likely as other mortgage holders to be in arrears,” explained Equifax’s Moses Samaha to the AFR.

While I think the RBA might recognise the impact of their rate rises on first homebuyers, the bank’s compassion is more about not sending us into recession.

The decision to pullback the size of the rate rise helped stocks surge yesterday, with the S&/ASX 200 index up a huge 3.75% (or 242 points). This spike in stocks was helped by softer economic data coming out of the US, which makes the market think that the Fed’s 0.75% rate rising program might be closer to an end.

However, this is guesswork at this stage, with Wall Street needing to see this Friday’s jobs report and next Thursday’s US inflation reading both saying that inflation is on the way down convincingly.

If we don’t see this, stocks will slide again. If we do, we could be “off to the races” even before the first Tuesday in November, that brings the Melbourne Cup.