The Reserve Bank of Australia (RBA) surprised currency markets by raising interest rates by 25 basis points to 3.85% at its latest policy meeting.
This fell short of market expectations that the central bank would keep interest rates unchanged.
Let's take a look at the main notes taken from the results of the meeting.
Efforts to return inflation to the target remain the central bank's priority.
Some further tightening of monetary policy may be necessary.
But, it depends on how the economy and inflation develop.
Although the latest data shows inflation declining, but forecasts still see it will take several years to return to the target.
Inflation is projected to be 4.5% in 2023, and 3% in mid-2025.
As a result, policymakers judge a further increase in interest rates to be appropriate today.
The RBA will continue to pay attention to global economic developments, trends in household spending and the outlook for inflation and the labor market.
The unemployment rate is predicted to increase gradually to around 4.5% in mid-2025.
GDP is forecast to grow by 1.25% this year and around 2% in 2024 to mid-2025.
The path to avoid recession is still narrow.
The RBA remains alert to risks that are expected to persist.
Following the unexpected results, the Aussie dollar jumped almost 1% against the US dollar to trade higher at around 0.6690.
In addition, it can also be seen that the RBA is still open to implementing an interest rate hike despite having left it unchanged at last month's meeting.
Therefore, investors need to focus further on the main Australian economic data published as a guide to the RBA's next policy setting.
