The Reserve Bank of Australia has raised interest rates for the first time in 12 years to curb soaring inflation - surprising financial markets with a bigger increase.
The cash rate has risen by 0.25 per cent basic points, ending the historic era of a record-low 0.1 per cent cash rate and marking the first increase since November 2010.
This was also much bigger than the 0.15 percentage point rise financial markets were expecting.
More than 1.5million borrowers will be coping with a variable increase for the first time.
The central bank move is also the first during an election campaign since November 2007, when former Liberal prime minister John Howard lost power.
The official rate now stands at 0.35 per cent after inflation in the year to March soared by 5.1 per cent - the fastest pace in 21 years.
Three of Australia's Big Four banks - ANZ, Westpac and NAB - are expecting the Reserve Bank to take the cash rate to two per cent by 2023.
The Reserve Bank of Australia has raised interest rates for the first time in 12 years to curb soaring inflation
Last month, the RBA predicted an increase in the cash rate to two per cent - a level unseen since May 2016, would cause a 15 per cent plunge in Australian property prices.
CoreLogic research director Tim Lawless