The RBA's ability to raise its cash rate has taken yet another hit

Westpac's decision to raise its variable mortgage rates by 14 bps puts a dent in the RBA's plans to raise its cash rate

Can it really get any worse for the RBA? Well, it sure looks like it can. Just when you think the central bank is already crippled in navigating a way to raise its cash rate, domestic banks have come in to deal yet another blow.

And the thing about Westpac's move earlier here is that it is going to be followed up with similar action by the rest of the "Big Four". This will only tighten the purse strings of consumers and amplify the growing concern of the RBA - household debt.

And the rates market is already responding in due kind. 3-year yields fell sharply on the news to below 2% again and that is a signal that traders are viewing this as bad news for the RBA, and rightfully so.

The aussie has also taken a hit as AUD/USD falls to a low of 0.7304 on the day. The RBA is already expected to make no changes to the cash rate until Q3 2019 at least, and the news here will only help to prolong that timeline even more if anything else.