The Reserve Bank of Australia today increased its main policy rate, the cash rate, by 25 basis points to 4.10 percent. Although the consensus forecast was for no change, this outcome was widely seen as a likely possibility after officials also raised rates last month. Except for a pause in April, officials have now increased policy rates at every meeting since beginning the current program of policy tightening in May last year, with the cumulative amount of rate increases now at 400 basis points.

Today's decision follows the release last week of monthly CPI data that showed an increase in headline inflation from 6.4 percent in March to 6.8 percent in April, further above the RBA's target range of two percent to three percent. Quarterly data showed inflation at 7.0 percent and stronger wage growth in the three months to March.

Although price pressures have moderated since late last year, the statement accompanying today's decision makes it clear that officials consider inflation remains too high and that they remain concerned about how long it will take to return to the target range. Officials also note that today's decision reflects their assessment that upside risks to the inflation outlook have increased, citing recent wage increases, ongoing tightness in the labour market, and the risk to inflation expectations.

Officials again acknowledged that the policy tightening they are implementing has risks for the growth outlook, noting that"the path to achieving a soft landing remains a narrow one". They again highlighted uncertainties to the outlook for both the global economy and household spending.

Officials judged that the rate hike today will"provide greater confidence that inflation will return to target within a reasonable timeframe" and also advised that"some further tightening of monetary policy may be required" in order to achieve that objective. They also reiterated that they"will do what is necessary to achieve that", depending on incoming data.

The Reserve Bank of Australia is expected to hold steady at its June meeting after unexpectedly raising rates by 25 basis points at its May meeting.

The Reserve bank of Australia (RBA) announces its monetary policy with regard to interest rates on the first Tuesday of each month with the exception of January when it is on vacation. The RBA is the central bank of Australia and its duty is to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. It does this by setting the cash rate to meet an agreed medium-term inflation target, working to maintain a strong financial system and efficient payments system.

The Reserve Bank of Australia's (RBA's) main responsibility is monetary policy. Policy decisions are made by the Reserve Bank Board with the objective of achieving low and stable inflation over the medium term. Other responsibilities include maintaining financial system stability, while at the same time promoting the safety and efficiency of the payments system. The RBA regards appropriate monetary policy as a major factor contributing to the Australian dollar's stability, which in turn leads to full employment and the economic prosperity for Australia.

The RBA is unique among the central banks - it has two boards with complementary responsibilities. The Reserve Bank Board is responsible for monetary policy and overall financial system stability. The Payments System Board has specific responsibility for the safety and efficiency of the payments system.

The RBA sets an interest rate at which it lends to financial institutions. This interest rate then affects the whole range of interest rates set by commercial banks and other institutions for their own savers and borrowers. It also tends to affect the price of financial assets, such as bonds and shares, and the exchange rate, which affect consumer and business demand in a variety of ways. Lowering or raising interest rates affects spending in the economy.

The level of interest rates affects the economy. Higher interest rates tend to slow economic activity; lower interest rates stimulate economic activity. Either way, interest rates influence the sales environment. In the consumer sector, few homes or cars will be purchased when interest rates rise. Furthermore, interest rate costs are a significant factor for many businesses, particularly for companies with high debt loads or who have to finance high inventory levels. This interest cost has a direct impact on corporate profits. The bottom line is that higher interest rates are bearish for the financial markets, while lower interest rates are bullish.