The Reserve Bank of Australia (RBA) board members decided to increase the official cash rate (OCR) by 50 basis points (bps) from 1.35% to 1.85% at its August 2 monetary policy meeting.

The central bank said the hike was a further step in the "normalization" of policy, dropping a previous reference to removing "extraordinary" stimulus in its policy statement. 

The RBA was forecast to raise the cash rate by 50 basis points to 1.85% at its Aug. 2 meeting, according to 32 of 34 economists surveyed by Reuters during July 22-28.

AUD/USD reaction

The AUD/USD pair came under renewed selling pressure in an immediate reaction to the expected 50 bps RBA rate hike.

At the time of writing, the aussie is down 0.40% on the day at 0.6994, having eroded 25 pips on the outcome.

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.