The Reserve Bank of Australia (RBA) raised its official cash rate (OCR) by 25 basis points (bps) from 2.35% to 2.60%.

The rate hike decision came as a dovish surprise, snapping the bank's four straight half percentage point hike track.

According to the latest Reuters poll, the median forecast showed rates going up another 50 bps next quarter to peak at 3.35%.

AUD/USD reaction

In an immediate reaction to the RBA decision, the AUD/USD pair plunged about 60-pips to 0.6454 before recovering to near 0.6465. At the time of writing, the aussie is down 0.79% 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.