While horses were whizzing around the track at Melbourne’s Flemington Race Course, The Reserve Bank of Australia issued a shock announcement that it would straddle mortgage holders with an official interest rate rise of 0.25%, bringing it to 4.75%.

Economists had tipped rates to remain steady. However, RBA governor Glenn Stevens said in a statement that:

a larger than expected slowing in Chinese growth have lessenred recently most commodity prices have firmed, after a fall earlier in the year.

The prices most important to Australia remain at very high levels, with the result that the terms of trade are at their highest since the early 1950s. The turmoil in financial markets earlier in the year has abated, though sentiment remains fragile.

The announcement seemed to catch everybody unaware, sending journos the country wide lunging towards their keyboards. The Herald Sun estimates that the rate rise will cost average mortgage-holders an extra $40 a month and “home buyers with $300,000 25-year loans from the bank will pay $88 extra per month.”

Some commentators instantly linked the rise to Joe Hockey’s recent calls for tighter banking regulation (“Hockeynomics”) while others focused on Treasurer Wayne’s Swan’s stinging rebuke of the RBA’s decision.

Here’s an overview of what the pundits had to say:

The Australian

David Uren: Wayne Swan hits ‘cynical’ bank cash grab

The Commonwealth Bank’s shock decision to almost double the RBA’s 25-basis-point rate rise has exposed the banking sector to a fresh round of regulation.

Condemning the Commonwealth’s move as a “cynical cash grab”, Wayne Swan foreshadowed a reform package to foster competition and stop the big four banks from exploiting their market dominance.

The Courier Mail

Michael Madigan: Time to name and shame banks say retailers after latest interest rate rise

Stunned retailers – who had expected the Reserve to hold fire in the lead-up to Christmas – accused the banking sector of “economic terrorism”.

The United Retail Federation said it was preparing a “name and shame” campaign against the banks. URF national president Scott Driscoll said the rise would “kill Christmas 2010” for retailers, consumers and workers.

The Age

Michelle Grattan: ‘Cash grab’ leaves Joe laughing

Joe Hockey, the butt of attacks from the government and some Liberals, was laughing yesterday. Many home borrowers will be cursing Commonwealth Bank, but, whatever the rights or wrongs of its action, in political terms it has justified Hockey’s criticisms of the banks and his calls for more competition.

Peter Martin: Fury over super-sized rate rise

Australia’s biggest bank has humiliated Treasurer Wayne Swan and thumbed its nose at a parliamentary inquiry by lifting its mortgage rates by nearly double yesterday’s surprise 0.25 percentage point increase in the Reserve Bank’s official cash rate.

Sydney Morning Herald

Lenore Taylor: It’s easy to own up to someone else’s problem

Joe Hockey has clinched his interest rates attack. The grand finale came yesterday when he declared the Gillard government and its ”insipidly weak Treasurer” owned the interest rate rises.

He claimed they owned the Reserve Bank rise because they were still spending too much. And they owned additional rises by the big banks because they hadn’t acted to increase competition in the banking sector.

Jessica Irvine: Saddle up for higher interest – and come home strongly in the long run

Fool me once, shame on you. Fool me twice, shame on me.

There could be no better aphorism to describe the thinking behind the Reserve Bank’s decision to lift interest rates despite last week’s tame inflation report.

Courier Mail

Dennis Atkins: Joe Hockey’s blast at banks seems vindicated

Wayne Swan and Joe Hockey will remember Melbourne Cup day 2010 for quite a while regardless of which horse they fancied in the big race.

The Daily Telegraph

Malcolm Farr: Hitting punters for an interest rate sling

The Commonwealth Bank, which once proudly carried the PR shingle of “The People’s Bank’’, sprinted to be first to show it thinks the public can be milked even more. Taxpayer guarantees during the global recession have allowed the bank to hit its taxpaying customers for a further sling.