The Reserve Bank of Australia has hintedon Tuesday that inflation will hit Australia after it resumed its normalcy in the economy, as the central bank delivered its sixth interest rate today by 25 basic points to 4.5 per cent.

The interest rate rise comes after the government gears up for the election this year.

The Commonwealth Bank of Australia increased its variable home loan interest rate, which will take effect from may 7, after the RBA's move.

CBA announced that it will increase its home loan variable rate to 25 basic points to 7.36 per cent. including its accounts - Netbank Saver and Online Saver.

Retail banks are also expected to comply with the interest rates as well.

RBA Governor Glenn Stevens said in a statement that inflation will likely target its management operations.

"Recent data on inflation confirms that it has declined from its peak in 2008, helped by a noticeable slowing in private sector labour costs during 2009, the rise in the exchange rate and the earlier period of slower growth in demand," Mr. Stevens revealed in a statement.

Mr. Stevens further adds that official cash rate may reach the "average" level, which the bank has been aiming for the past months.

"The board expects that, as a result of today's decision, rates for most borrowers will be around average levels. This represents a significant adjustment from the very expansionary settings reached a year ago," he said.

A chief economist Scott Haslem said that RBA's statements today was different from its previous statements way back on the interests rates.

"The RBA remains in a position where it's balancing the strong forecast outlook for the economy and disappointingly slow moderation in inflation, with the current evident softness in interest sensitive sectors, such as housing lending and retail spending," Mr. Haslem said.

On the other hand, Robert Brooker of National Australian Bank argues that the central bank should assess the impact on the recent increases in the economy.

Stephen Walters, chief economist of JPMorgan, told media that RBA might increase its key cash rate to 6.25 per cent by the end of the calendar year.

The Central Bank's move for a cash rate for the sixth time is recorded as the highest since the end of 2008.