The Reserve Bank of Australia (RBA) raised interest rates by 50 basis points for the fourth time in a row at its September policy meeting.
This has brought current interest rates to a 7-year high of 2.35% with more tightening expected in the future to combat inflation.
Policymakers reiterated that they will raise rates further in the coming months, but that they will not follow a predetermined path as the size and timing will be driven by incoming data.
However, in contrast to previous statements that the rate hike was to normalize Australia's monetary policy, the RBA changed it to help bring inflation to target.
It is also to create a more sustainable supply and demand balance in the Australian economy, where price stability is a prerequisite for economic strengthening and sustainable full employment growth.
Analysts see the shift from 'normalisation' to 'price stability' suggesting interest rates are now in neutral territory, but given there is no change in forward guidance, it will continue to deliver rate hikes as long as needed.
In the meantime, it will also pay attention to any signs of a slowdown in global economic growth due to monetary tightening in many countries, the Russia-Ukraine war and the Covid-19 shutdown and other policy challenges from China.
The Aussie dollar's after-reaction saw the currency fail to capitalize on the RBA's decision, remaining traded below the 0.6800 level against the US dollar.
