The Reserve Bank of Australia decided to ease back to a 25 basis point interest rate lift despite markets broadly expecting another 50 basis point jump.
Minutes from the October board meeting reveal arguments for both a 25 and 50 basis point lifts, with the smaller increment narrowly emerging as the better choice.
"A smaller increase than that agreed at preceding meetings was warranted given that the cash rate had been increased substantially in a short period of time and the full effect of that increase lay ahead," the minutes said.
The board also said the slower pace of rate hikes would give the Reserve Bank an opportunity to assess incoming domestic and international data, including the latest employment figures due this week and inflation data for the September quarter the week after.
On the other hand, the central bank was worried about the persistence of high inflation and the possibility of wage growth surging as it has in other economies. This would make it harder to rein in inflation.
The bank also said the decision to shift to a smaller increment would make it the first among advanced economies.
"This might in turn prompt an unhelpful reaction in inflation expectations and financial markets if the community came to question the board's resolve to reduce inflation," the minutes said.
The board also pointed to more lifts to the cash rate "over the period ahead" to return inflation within the two-to-three per cent target range.
In a speech on Tuesday, RBA assistant governor Michele Bullock said other central banks meet less frequently to make interest rate decisions so need to move in bigger increments.
The RBA board meets 11 times a year - every month except January - whereas the Federal Reserve in the United States meets eight times a year.
Ms Bullock said the RBA hiked rates just as fast - if not faster - than most central banks when these timing differences were taken into account.
She said Australia was in a different position to other countries when it came to monetary policy, with Australians thought to be more sensitive to rate hikes given high levels of household debt and the prevalence of variable-rate mortgages.
Ms Bullock also addressed concerns failing to follow the lead of other central banks still hiking rates aggressively could weaken the Australian dollar.
"It's something that we watch, obviously, but we're not only driven by that," she said.
Ms Bullock said all currencies were declining against the strong US dollar, not just the Australian dollar.
The treasurer has warned the latest flooding events in southeast Australia may also contribute to higher inflation.
While Jim Chalmers said it was too early to tell how much damage the floods would do to the federal budget and the economy more broadly, he said the disaster would be factored into the budget's inflation projections.
Consumer sentiment also remains depressed, with consumer confidence as measured by an ANZ and Roy Morgan every week falling to its lowest level since August.
The 2.8 per cent slide in weekly confidence follows a 1.1 per cent drop the previous week.
