The Reserve Bank of Australia (RBA) hiked the cash rate up by a widely expected 50 basis points, with RBA governor Philip Lowe saying the Australian central bank remained committed to returning inflation to the 2-3% range.

However, it plans to do this while also keeping the economy on an “even keel” and Lowe said the path to achieving this balance was a narrow one that was “clouded in uncertainty”, especially considering the current global environment.

He stressed that today’s further increase in interest rates would help bring inflation “back to target” and create a more “sustainable balance of demand and supply” in the Australian economy.

“The board expects to increase interest rates further over the months ahead, but it is not on a pre-set path,” Lowe said in his statement.

“The size and timing of future interest rate increases will be guided by the incoming data and the board's assessment of the outlook for inflation and the labour market.”

He said the board was committed to “doing what is necessary” in its pursuit to ensure that inflation in Australia returns to target over time.

Peter Esho, co-founder of Wealthi, an Australian investment property platform, said there was “no real surprise” with today’s RBA announcement. 

He said he believed the RBA had one more rate hike “in the bag” before it potentially started to pull back next year on a “faster than expected” inflation fall. 

The New Zealand dollar was sitting at 89.69 Australian cents just before the announcement was revealed at 4:30pm NZST and slipped to 89.55 AU cents by 5pm around.

When it came to the kiwi and greenback cross, the kiwi was sitting at 60.96 US cents at 5pm, up from 60.91 US cents on Monday.

On the New Zealand market front, index heavyweights dragged down the market over the course of the day.

The S&P/NZX 50 Index fell 19.8 points, or 0.17%, to 11,599.23. Turnover was again light at $95.6 million.

Fisher and Paykel Healthcare weighed down the index for the second day in a row, falling 2.3% to $18.90 by early evening and trading over $7.1m worth of shares over the day.

Last week, the healthcare manufacturer announced it was planning to spend $275m on a 105-hectare site in South Auckland to establish a second research and development and pilot manufacturing facility.

Renewable energy company Infratil also edged down 0.4% to $9.51 and had the most value traded on the index – $23.1m by the end of the day, accounting for almost a quarter of turnover.

Agribusiness group Scales Corp had one of the biggest jumps on the index today, up 4.8% to $4.79. Other climbers were aged care provider Ryman Healthcare which rose 1.4% to $9 and fuel company Channel Infrastructure NZ was up 2.2% to $1.40.