John Howard has been slapped with a rate rise of 25 basis points this morning, lifting the Reserve Bank's official cash rate to an 11 year high of 6.75 per cent.
The PM will deal with the fall-out surrounding the rise in hustings of Brisbane, where he is currently campaigning.
In a press conference this morning, Howard acknowledged that the adjustment would hurt Australian families, but defended the Coalition's economic credentials.
"It is of course necessary to keep interest rates in perspective. They are still lower now than any other time during the previous Labor government," he said.
"The Australian financial situation remains sound."
But Howard warned voters that the economy is not something that runs on "auto-pilot", attacking the inexperience of Kevin Rudd's team, and what he labelled an inflationary Opposition IR policy that would result in a "wage breakout".
"If Labor wins this election, interest rates will be higher than if the Coalition wins the election," he said.
"More than ever, the economy will be front-and-centre to this election campaign."
Read the official Reserve Bank statement here.
See what news.com.au readers are saying about the hike here.
And what The Age readers are saying here.