The Reserve Bank of Australia increased interest rates by a quarter point for the second month in a row on Tuesday, pushing the cash rate to 4.1%, an 11-year high.
The move came as a surprise to the market, with the RBA explaining the increase as it would boost confidence that inflation will return to goal within a reasonable timeframe.
Most of the economists surveyed by Reuters expected the central bank to leave interest rates unchanged.
To ensure inflation returns to goal, the central bank indicated at the conclusion of its June policy meeting that further tightening of monetary policy may be required.
“Recent data indicate that the upside risks to the inflation outlook have increased and the Board has responded to this,” stated RBA Governor Philip Lowe.
Many analysts considered the June meeting conclusion as a line-ball call after the RBA stunned markets by tightening again in May after a brief one-month hiatus.
