Australia’s central bank surprised the market by raising its cash rate by 25 basis points to 3.85%, resuming its tightening cycle after pausing in its previous meeting.

The move goes against the expectations of economists, who predicted that the central bank would keep rates at 3.6% for a second consecutive meeting.

The Australian dollar surged by 0.84% against the U.S. dollar, while the benchmark S&P/ASX 200 fell by 0.9%.

The Reserve Bank of Australia stated that the nationwide inflation rate of 7% was still “too high” and that further tightening of monetary policy may be required to bring inflation down to its target of 2% to 3%. The central bank also forecasts 2023′s full-year inflation to stand at 4.5%.

Bank of England hikes interest rates by 25 basis points to 4.25%