Australian shares closed lower on Tuesday as the central bank said more interest rate hikes were needed to control inflation, dashing hopes for a pause in tightening.

The S&P/ASX 200 index fell 0.5% to 7,291.3, with miners and banks leading the decline.

The Reserve Bank of Australia (RBA) raised interest rates by 25 basis points to a 10-year high of 3.1%, bringing its hikes to a hefty 300 basis points since May.

The central bank will next meet in early February to deliberate on the rates.

CMC Markets analyst Azeem Sheriff said he believed the RBA would continue with its quarter-point hikes unlike any potential change in the US Federal Reserve’s pace, and that there was no need for the central bank to slow its pace any further.

Analysts at Citi said they remained “comfortable” with another 25-bp hike in February for a peak in this cycle to 3.35%, but saw the risk of the central bank moving to 3.6% before stopping.

Financials fell 0.6%, with the “big four” banks closing in negative territory. Australia and New Zealand Banking Group dropped 0.8%.

Miners slipped 0.8%, tracking weakness in broader markets and as iron ore futures retreated in volatile trade.

Australian shares end higher on mining boost; RBA decision in focus

Mining behemoths Rio Tinto and BHP Group fell between 0.1% and 0.5%.

In other news, Australia’s current account fell into deficit for the first time in three years last quarter as robust domestic demand sucked in imports and miners paid more dividends abroad, though the drag on economic growth was not as large as first feared.

New Zealand’s benchmark S&P/NZX 50 index fell about 0.4% to finish the session at 11,631.6.