The 25 basis points cash rate hike implemented by the Reserve Bank of Australia (RBA) on Tuesday was avoidable if the Coalition was to be believed but it became inevitable as the federal government remained adamant in reducing its stimulus spending to prop up the economy.

The country's central bank moved for a policy rate lift of 4.75 percent at the start of November, the first upward surge since the pause observed by the RBA since May this year, with Governor Glenn Stevens believing that the decision was prudent and timely.

Mr Stevens argued that the rate increase for the month would serve as a precautionary measure by the RBA to effectively deal with an Australian economy that clearly heads into a 'large expansionary shock'.

Yet aside that, opposition treasury spokesman Joe Hockey blamed the Labor-led federal government for the cash rate movement, stressing that the push upward could have been circumvented had the government pulled back its guns on unprecedented expenditures.

In an effort to artificially pump up the Australian economy, Mr Hockey said that the government stubbornly stuck on its policy of 'reckless spending' as he added that the move led to a whopping budget deficit of $41 billion.

He stressed that the deficit came at a time "when the economy is running at close to full capacity," which according to him is grossly economic vandalism."

Mr Hockey said that the economic team of Prime Minister Julia Gillard and Treasurer Wayne Swan should be held accountable for mishandling the economy, which he asserted would inevitably burden household and business budgets in months or even years to come.

As a direct result of the latest RBA decision, retail banks would automatically opt for rate hikes on their mortgage and other loans, which Mr Hockey said could be at least cushioned by the existence of healthy competition among banks.

He argued that with just sufficient intervention from the government and vaunted competition in the industry, "lenders would have competed to minimise the impost on borrowers, including delaying interest rate increases or by not passing on the full RBA cash rate move."

To generate and spawn a better competition environment in the banking sector, Mr Hockey reiterated his calls on Mr Swan to adopt his nine-point banking reforms plan, which elicited criticisms from both government and industry experts.