The Reserve Bank of Australia (RBA) agreed to raise interest rates by 25 basis points in its first policy meeting for the year.
It broadly met market expectations and brought the official cash rate (OCR) to 3.35% after nine consecutive hikes.
At the same time, a follow-up statement from RBA Governor Philip Lowe's hawkish tone also stole the attention of investors in the Asian session.
Inflation is expected to decline this year due to slower global and domestic demand.
Policymakers expect further increases in interest rates.
Wage growth continues to pick up and further increases are expected due to a tight labor market and higher inflation.
The RBA reiterated its stance to return inflation to the 2% target.
Inflation is expected to decrease to 4.45% this year and around 3% by mid-2025.
GDP is forecast to slow by around 1.5% in 2023 and 2024.
Chances of avoiding a recession are slim.
A hawkish statement from the RBA was expected, especially given the inflation data which surged to a new 33-year high in the fourth quarter.
Following the results, the Aussie dollar jumped 0.8% to trade around 0.6940 against the US dollar.
