The Reserve Bank of Australia on Tuesday raised its cash rate target by 25 basis points to 4.85%, the bank said in a statement. It was the fifth increase this year, the Guardian reports. The rate is now at its highest level since December 2008, Nine reports.

The decision split the bank's monetary policy board, the Guardian reports. Six members voted for a rise, while three were in favour of holding the rate steady.

"Inflation is too high, and our forecast suggests it will stay higher for longer. Some pain now will prevent even worse pain down the track," Governor Michele Bullock said to journalists after the decision, according to the Guardian.

In its statement, the board said inflation "remains elevated" and is not expected to reach the top of its 2-3 per cent target range until late 2027. The statement said this was about three quarters later than previously forecast. Higher fuel prices linked to the Middle East conflict were part of the reason, it said, but domestic capacity pressures were also a little tighter than earlier thought.

Bullock said the bank was not tightening policy "because of the direct impact of oil prices on inflation," Nine reports. She said the bank's forecast did not see Australia going into recession, but did see growth "slowing quite markedly," Nine says.

Asked about further moves, Bullock said: "What that means for interest rates in the future? I don't know the answer to that," Nine reports.

The rise will lift the monthly interest payment on a $700,000 home loan by $107, according to the comparison site Canstar, the Guardian reports.

Treasurer Jim Chalmers said higher fuel prices due to the Middle East conflict were the "primary driver" of the recent rise in inflation, the Guardian reports. Opposition leader Angus Taylor blamed government spending, the Guardian says.

Financial markets halved the chance of another rise before Christmas to 12%, the Guardian reports.