Following a surprise 25 basis points (bps) rate hike delivered in May, the Reserve Bank of Australia (RBA) board members decided to hike the Official Cash Rate (OCR) by another 25 bps to 4.10% at its June policy meeting, a hawkish surprise once again.

According to the latest Reuters poll, nearly a two-thirds majority of economists, or 21 of 32, expected the RBA to hold its benchmark interest rate at 3.85% this Tuesday.

AUD/USD reaction

In a knee-jerk reaction to the RBA decision, the AUD/USD pair jumped nearly 50 pips to test 0.6675 before retreating to 0.6600, where it now wavers. The pair is up 0.66% on the day.

AUD/USD: 15-minutes chart

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.