The board of the Reserve Bank of Australia had anticipated that bank lending rates could increase by more than the cash rate, according to the minutes of the Nov 2 meeting released on Tuesday.

The Reserve Bank raised the cash rate by 0.25 percentage points to 4.75 per earlier this month. Australia's major banks all raised their variable lending rates by more than the RBA's move.

The Commonwealth has lifted standard variable rates by 0.45 percentage points, the NAB is up 0.43, the ANZ 0.39 and Westpac 0.35.

"Members noted that lending rates might increase by more than the cash rate, but this tendency would not be lessened by delaying a change in the cash rate. Lending rates had been rising relative to the cash rate since the global financial crisis, and the Board had taken this into account in setting the cash rate. It would continue to take account of any changes in margins in its decisions in the period ahead," the minutes said.

It also showed the RBA's decision to tighten policy and lift the official cash rate on Melbourne Cup day was "finely balanced," but reduced uncertainty over the international economy was enough to shift the odds in favour of an interest rate rise.

Strengthening economic activity and gradually rising inflation were key factors in the central bank's decision to lift the cash rate in November.

"In previous meetings, members had discussed the likelihood that interest rates would need to rise, at some point, if the economy continued to evolve in line with the central scenario. Based on developments over the past month and the latest assessment of the outlook, members judged that the point at which some upward move in interest rates would be necessary had moved closer."

"As in October, a case could be made for waiting a little longer: the expected pick-up in domestic growth would be only in its early stages; the latest CPI outcome had been relatively good; and credit growth and housing prices were subdued. In addition, the exchange rate had appreciated over the past month, and quite significantly over a longer period, which would dampen inflation pressures somewhat. There might also be a case for waiting to see if the Federal Reserve's upcoming announcement had a significant further effect on the exchange rate."

"On the other hand, some of the uncertainties that had been a reason to keep interest rates steady over the past few months had lessened recently, even though they had not dissipated completely. Compared with several months ago, downside risks to the global economy had still not materialised in any significant way. Indeed, the uncertainty regarding the outlook for the Chinese economy had lessened, commodity markets had strengthened and the outlook for investment had firmed. With only a relatively modest amount of spare capacity in the economy, a gradual upward trend in inflation remained likely over the medium term."

"If monetary policy was to be conducted in a forward-looking way, these developments meant there was a case for increasing interest rates at the current meeting," RBA said.

The Australian dollar fell almost 0.2 of a US cent after the release of the Reserve Bank's minutes.

Shortly after the release, the local unit was trading at 98.21 US cents, down from 98.39 US cents before.