Analysts at TD Securities note that the Reserve Bank of Australia (RBA) surprised the market by raising its policy rate by 25 basis points to 3.85%.

Will assess RBA call following the SoMP on Friday

"We expected the Bank to remain on hold at 3.60% after last week's Q1 CPI release revealed inflation fell by more than the RBA expected."

"The preliminary forecasts provided in today's Statement on balance do not appear significantly different from the February Statement of Monetary Policy (SoMP) forecasts and on balance supported the Bank remaining on hold in our view."

"While the minutes of the April meeting were hawkish and read as more supportive of a hike than a pause at that meeting, today's Statement suggests the Bank may have a few more hikes up its sleeve to deliver. We will assess our RBA call following the SoMP on Friday and potentially after the 9th May Federal Budget."