“The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected,” it said, announcing the decision. “There is also evidence that wages growth is picking up. Given this, and the very low level of interest rates, it is appropriate to start the process of normalising monetary conditions.”

AMP Capital chief economist Shane Oliver said that with inflation blowing out to above 5 per cent and full employment having been reached, it’s now only a matter of time before official wages data picks up.

Mr Oliver, who correctly predicted that rates would rise this month, said that delaying the increase would have risked a “rise in inflation expectations, making it harder to get inflation back down”.

Bendigo and Adelaide Bank head of economic and market research David Robertson agreed that consumer price index (CPI) data, including a core inflation rate of 3.7 per cent has added even more urgency for the RBA to lift interest rates.

LJ Hooker head of research and business intelligence Mathew Tiller said inflationary pressures have continued to “accelerate across the globe and Australia has not been immune”.

The RBA said the resilience of the Australian economy was particularly evident in the labour market, with the unemployment rate declining to 4 per cent.

“Both job vacancies and job ads are also at high levels. The central forecast is for the unemployment rate to decline to around 3.5 per cent by early 2023 and remain around this level thereafter. This would be the lowest rate of unemployment in almost 50 years,” it said.

And it flagged that this would be just the first rise of many.

“The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time. This will require a further lift in interest rates over the period ahead. The board will continue to closely monitor the incoming information and evolving balance of risks as it determines the timing and extent of future interest rate increases,” it said.