The increase, the second in as many months, will lift monthly repayments on an average $300,000 home loan by about a further $46, assuming retail banks match the central bank’s move.

Economists had widely anticipated the increase after yesterday’s RBA board meeting, as the bank gradually moves monetary policy setting to a more normal level.

RBA governor Glenn Stevens said economic growth was likely to be close to trend over the year ahead, and inflation close to the central bank’s 2 to 3 per cent target.

“With the risk of serious economic contraction in Australia now having passed, the board’s view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker,” Mr Stevens said in a statement.

“The adjustments at the October and November meetings will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead.”

• More reports page 18