The Reserve Bank has raised its interest rates target another 0.25 percentage points in March and has signalled even further increases will be needed to curb the highest inflation in decades.

The RBA extended its record streak of rate hikes at its second meeting of the year on Tuesday, with the official cash rate rising for the 10th time in a row to 3.6 per cent – the highest level since mid-2012.

The hike will increase monthly repayments on a $500,000, 25-year home loan by $77, bringing the total increase since the RBA began hiking last May to about $983, according to RateCity figures.

Annualised, that increase is now more than $11,700, but despite acknowledging many Australians are doing it tough in February, RBA governor Philip Lowe said on Tuesday that more will be needed.

“The Board recognises that monetary policy operates with a lag and that the full effect of the cumulative increase in interest rates is yet to be felt in mortgage payments,” Dr Lowe said in a statement on Tuesday.

“There is uncertainty around the timing and extent of the slowdown in household spending.”

Tuesday’s rate-hike was broadly expected by analysts, who had taken Dr Lowe’s commentary in February as a sign the central bank was prepared to be aggressive in 2023 to reduce inflation.

Dr Lowe said inflation was “way too high” and that “we’re not at the peak yet” when asked how high interest rates could rise in 2023.

The RBA is attempting to curb price growth by reducing the capacity of households to purchase goods and services, reducing demand and making it harder for businesses to hike prices more.

Recent economic data suggest that process has begun, with inflation easing in January amid a pullback in spending growth over the December quarter and some lower international prices.

But upcoming data on prices and the jobs market in early-2023 is expected to be critical in what the RBA decides to do next, with analyst forecasts currently suggesting several more rate hikes.

That’s because inflation, though starting to fall, is still far above the RBA’s 2-3 per cent target band – something that the bank itself predicts to continue until at least late next year.

Dr Lowe reiterated on Tuesday that demand was still running too hot across Australia, but that the RBA would not pre-empt its future rate decisions and will consider upcoming economic data.

“The Board expects that further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary,” Dr Lowe said on Tuesday.

“In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.

“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”

The RBA has hiked its interest rates target from a record low 0.1 per cent back in May 2022 to 3.6 per cent in its past 10 meetings.