The Reserve Bank of Australia (RBA) board members announced a 50 basis points (bps) hike to its official cash rate (OCR), lifting it from 0.35% to 0.85% at their June 7 monetary policy meeting.

The RBA surprised markets once again to the upside, as they had priced in a 25 bps lift-off.

The central bank fights raging inflation head-on, with a big hike while it says that “the economy is resilient.”

A Reuters poll of 35 economists showed the RBA will lift its cash rate by another 25 bps to 0.60%. 11 predicted a 40 bps increase to 0.75%, where rates were before the pandemic.

AUD/USD reaction

The AUD/USD pair jumped over 50-pips in a knee-jerk reaction to the hawkish RBA decision.

The spot was last seen trading at 0.7233, up 0.60% on the day.

About RBA rate decision

RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.