A report on the minutes of the Australian Central Bank (RBA) meeting showed policymakers had considered raising interest rates by as much as 40 basis points at their meeting in early May.
However, the central bank decided to raise the interest rate by 25 basis points to 0.35% to mark the RBA's return to normal operating procedures.
According to a report published at the Asian session, the RBA said it would have the opportunity to review the interest rate setting in a relatively short period of time based on additional information as meetings are held on a monthly basis.
Moreover, policymakers also agreed that further increases in interest rates may be needed to ensure inflation in Australia returns to target over time.
Following the disclosure of the minutes of the meeting, analysts saw it as a clear indication and now predict the RBA will implement an interest rate hike again in June, with a possible 25 basis point hike.
The surge in inflation to a 20 -year high in the first quarter has prompted the RBA’s sharp shift in its monetary policy. Core inflation has risen 3.7%, the highest since 2009 and far from the central bank's 2-3% target.
In fact, the RBA now expects core inflation to remain above target until 2024, thus signaling more tightening awaiting in the coming months.
