It was the race that stopped a nation but most punters knew the outcome before the horses even got to the barrier.

Rising Rates was the shortest priced favourite since final acceptances were called for the federal election.

The Reserve Bank of Australia board normally holds a meeting on Melbourne Cup Day for two reasons. Firstly, to go through the formality of discussing interest rates, not thinking of raising them on this important day on Australia’s sporting calendar.

Secondly, having their board meeting on Melbourne Cup Day also ensures they are conveniently gathered together for a sedate drive out to Flemington for The Cup.

Not so this time around. The RBA board, not wanting to get in the way of election day, had tried to get a nice easy rails run and squeeze through at the end to record a win-win situation.

Instead, it got boxed in and with other runners bunching up around it – High Inflation, Skills Shortage, Increased Spending and Strong Aussie Dollar – was forced to pull out, go wide and settle in for a long sprint home.

The RBA found itself caught between a rock and a hard place. Lift rates now, in the course of an election, or wait until December and be seen as Bad Santa by hitting Christmas stocking.

The RBA’s decision to increase the cash rate by 25 basis points to 6.75% is not surprising following the release of inflation figures last month.

Real Estate Institute of Queensland (REIQ) managing director Dan Molloy said the increase – which takes the cash rate to its highest level since July 1996 – was a bid by the Reserve Bank to take some heat out of an economy affected by skills shortages, the inflationary impact of election commitments and continued high consumer spending driven by the strong Australian dollar.

All of these factors, as well as the underlying inflation rate being at the top of the Reserve’s 2 to 3% target range, prompted the Reserve Bank to increase interest rates, Mr Molloy said.

The strong economic conditions, and this latest rate rise, are little comfort to aspiring first-home buyers who continue to struggle to move out of the rental market and into their own place.

Mr Molloy said the historic decision by the Reserve Bank to raise interest rates during an election campaign was not only a sign of its independence but also that it is in a monetary tightening mode.

Colliers International director, research and consulting, Colin Dwyer said the sixth interest rate rise since the last election may not be the last.

Both the headline and underlying measures of inflation are likely to be above 3% by the March quarter of next year, indicating that the next change is likely to be up rather than down.