Australia’s central bank raises rates by 50 basis points in hawkish surprise

Australia’s central bank on Tuesday raised interest rates by the most in 22 years and flagged more tightening to come as it battles to restrain surging inflation, stunning markets and sending the local dollar flying.

Wrapping up its June policy meeting, the Reserve Bank of Australia (RBA) lifted its cash rate by 50 basis points to 0.85%, wrong footing investors who had wagered on a move of either 25 or 40 basis points.

The central bank had already lifted rates by a quarter point in May, the first increase since 2010, and many had thought it would stick to quarter-point moves. The last time it hiked by more was in early 2000.