The RBA raised its cash rate target by 25 basis points to 3.75%.
The latest policy tightening entrenches the RBA's position as the only central bank in the Group of 20 to be raising interest rates, with financial markets expecting more increases in early 2010 as other country's cash rates close to zero.
The RBA has forecast economic growth will return to long-term average rates of around 3.0% in 2010.RBA Governor Glenn Stevens gave no hint that the central bank will suspend hiking rates in early 2010, saying only that the 75 basis points in hikes since October represented a "material" tightening of policy.
Treasurer Wayne Swan indicated he thought rates will need to rise further. The RBA's policy meeting board does not meet again until February 2.