The Reserve Bank has increased the cash rate by 25 basis points to 2.85 per cent.

Announced after the board’s monthly meeting on Tuesday afternoon, the RBA said it will continue to increase interest rates over the period ahead. The size and timing of these increases will be determined by the incoming data and the board’s assessment of the outlook for inflation and the labour market.

The Reserve Bank is closely monitoring the global economy, household spending, and wage and price-setting behaviour.

“The Australian economy is continuing to grow solidly,” RBA governor Philip Lowe said.

“Economic growth is expected to moderate over the year ahead as the global economy slows.”