Australian shares jumped on Tuesday to their highest close in seven weeks, as the country’s central bank stuck with a slower pace of rate hikes even as it raised its inflation outlook and indicated more tightening ahead.

The S&P/ASX 200 index rose 1.7% to 6,976.90, with miners and financials leading the gains in broad-based buying.

The Reserve Bank of Australia (RBA) lifted its cash rate by an expected 25 basis points (bps) to a nine-year peak of 2.85% and said it now expected inflation to peak around 8% later this year, up from a previous forecast of 7.75%.

Australian shares post best monthly gain since March; RBA decision in focus

The market had already priced in a 25-bp hike, hence there was minimal impact after the decision, said Azeem Sheriff, a market analyst at CMC Markets.

“The RBA’s updated forecasts have inflation above the top of its target band for more than three full years… This must pose some risks to medium-term inflation expectations, and the possibility that they become unanchored,” ANZ analysts said in a note.

Rates have already risen by 275 basis points since May and the RBA had wanted to slow down and see how the drastic tightening was affecting consumer spending.

However, consumer spending has remained strong, the job market stayed tight and inflation raced to a 32-year high last quarter. Heavyweight mining stocks rose 2.8% as iron ore and copper prices strengthened.

Financial stocks rose 1.3%, with the “big four” banks adding between 0.9% and 1.6%. Rising oil prices helped energy stocks gain 2.1%, while gold and healthcare stocks advanced 1.4% and 1.1%, respectively.

New Zealand’s benchmark S&P/NZX 50 index fell 0.2% to 11,316.64.