Australian shares reversed course and ended lower on Tuesday, after the central bank raised its cash rate by an expected 25 basis points and flagged that further interest rate hikes would be needed to tame inflation.

The S&P/ASX 200 index closed 0.5% lower at 7,504.10, after rising as much as 0.2% earlier in the session. The benchmark fell 0.3% on Monday.

The Reserve Bank of Australia (RBA) raised its cash rate to a decade-high of 3.35% and reiterated that further increases would be needed to ensure that inflation returns to its target of 2-3%, a more hawkish policy tilt than many had expected.

“The ongoing strength in inflation and the prospect of such an extended period of inflation well above the target continues to raise the risk that medium-term inflation expectations become unanchored,” analysts at ANZ wrote in a note.

Futures market has priced in a peak rate of 3.9%, implying at least two more rate hikes, compared with 3.75% before the decision. “Market has held up too well on China optimism and global flow, and we see the local market gradually unwinding,” Deep Data Analytics Chief Executive Officer Mathan Somasundaram said.

“More hikes are to come and that means property sector and equities are under more pressure.” Real estate stocks retreated 1.6% and healthcare stocks lost 1.4%.

Australian shares post worst day in near 2 weeks ahead of rate decision

Heavyweight mining stocks fell 0.2% as iron ore futures dipped. Sector majors BHP Group and Rio Tinto fell 0.4% and 0.9%, respectively.

Financial stocks followed suit to slip 0.1%. Rising oil prices helped energy stocks gain 0.5%, while gold stock advanced 0.6%.

The country’s largest gold miner Newcrest Mining, which received a $16.9 billion buyout offer from US-based Newmont Corp on Monday, extended gains to rise 1.7%.

New Zealand’s benchmark S&P/NZX 50 index fell 0.6% to 12,128.98.