Reserve Bank of Australia (RBA) on Tuesday announced it decided to raise interest rates at its meeting in May, adjusting the monetary policy setting by 25 basis points after holding the rates steady for two months.
The central bank's targets for the cash rate and the interest rate on Exchange Settlement balances will be increased to 3.85% and 3.75%, respectively.
"While the recent data showed a welcome decline in inflation, the central forecast remains that it takes a couple of years before inflation returns to the top of the target range," RBA Governor Philip Lowe said, noting that the priority of the central bank's board is to return inflation to target.