The Reserve Bank of Australia has lifted interest rates for the seventh month in a row.

The board decided to increase the cash rate target by 25 basis points to 2.85 per cent.

RBA governor Phillip Lowe said it’s predicted inflation will hit 8 per cent in the coming months.

“The board has increased interest rates materially since May,” he said in a statement.

“This has been necessary to establish a more sustainable balance of demand and supply in the Australian economy to help return inflation to target.

“The board expects to increase interest rates further over the period ahead.”

Senior economist at AMP Capital, Diana Mousina said the RBA wants to see consumer spending fall.

“The problem is, a lot of these inflationary pressures have nothing to do with consumer spending, things like electricity, gas process, commodity prices, food prices, unfortunately a lot of these things are the result of some global supply shocks, and some domestic supply shocks,” she told Neil Breen.

Press PLAY below to hear her predictions for the rest of the year

Finance reporter with the Motley Fool, Scott Phillips, said it was expected.

Press PLAY below to hear him explain more