The Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points to 4.35% in May, fully reversing the easing implemented in 2025.
Minutes from the meeting show eight out of nine members voted for the hike, citing increased inflation risks from the ongoing Middle East conflict.
The board judged that financial conditions would likely be somewhat restrictive after the decision, giving it space to assess the impact of the conflict on businesses and households.
Markets are pricing in another hike in August, with rates expected to peak at 4.60%.
