At its September 6 monetary policy meeting, the Reserve Bank of Australia (RBA) announced a 50 basis points (bps)  rate hike, rasinig its official cash rate (OCR) from 1.85% to 2.35%.

The rate hike decision was widely anticipated and marked the fourth straight half percentage point increase by the central bank and the fifth rate hike since May.

According to RBAWatch, markets are wagering rates could peak around 3.85% next year given inflation is running at a 21-year high of 6.1% and likely to top 7% by Christmas.

AUD/USD reaction

In an immediate reaction to the RBA decision, the AUD/USD pair slipped about 10-pips to 0.6793 before recapturing 0.6800. At the time of writing, the aussie is up 0.13% on the day at 0.6804.

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.