The Reserve Bank of Australia on Wednesday raised its benchmark interest rate in response to a surge in consumer prices that has sent inflation past the limit targeted by the bank.

While the decision to raise the overnight cash rate target by a quarter of a percentage point to 6 per cent was expected, the Australian dollar gained Wednesday on worries that the central bank would be forced into another rate rise before year-end. The RBA fuelled those concerns by warning that “underlying inflation in the period ahead was likely to exceed previous forecasts”.