The Reserve Bank of Australia (RBA) again met market expectations by raising interest rates by 50 basis points at its latest policy meeting.
With a second consecutive half-basis point increase, this took Australia's interest rate up to 1.85%.
Governor Philip Lowe said the previous increase in interest rates was necessary to lower inflation and create a more sustainable supply and demand balance in the Australian economy.
The RBA has also committed to further tightening but it is not on a 'set path', as the size and timing of interest rates will be driven by incoming data.
In addition to that, it also depends on the policy maker's assessment of inflation and the labor market.
The central bank is now forecasting Australian consumer inflation for 2022 to be around 7.75% and slightly above 4% in 2023. While the growth forecast is lowered to 3.25% in 2022 and 1.75% in 2023.
Overall, the RBA is seen to start slowing rate hikes following its statement that policy makers are not on a set path and changes will be subject to data.
Additionally, the central bank has also dropped previous references to eliminating 'extraordinary' stimulus in its latest policy statement.
This left the Aussie dollar plunging lower than the one-month high it hit on Monday against the US dollar.
