The central bank's board agreed to a 25 basis point increase at its monthly meeting on Tuesday, taking the official cash rate to 3.10 per cent - the highest rate since 2012.

Reserve Bank governor Philip Lowe said the board expected to raise rates higher in the new year as it tries to slow inflation.

The rate hike means home owners would need to fork out an extra $82 each month to cover mortgage repayments on a $500,000 home, if the rise is passed on by the banks in full.

Adding together the eight rate rises of 2022, the same home owner would be spending an additional $897 on monthly repayments compared to April.

The Reserve Bank has lifted the cash rate each month since May in an attempt to put the brakes on inflation, which soared to 7.3 in the September quarter.

The annual inflation rate dipped to 6.9 per cent in October, raising hopes the year-end forecast of 8 per cent might not eventuate.

But in a statement following Tuesday's meeting, Dr Lowe reiterated the expectation inflation would peak "at around" 8 per cent in the December quarter.

Dr Lowe defended the "substantial cumulative increase in interest rates" since May, arguing it was necessary to ensure the inflation surge was only temporary.

"High inflation damages our economy and makes life more difficult for people. The board's priority is to re-establish low inflation and return inflation to the 2-3 per cent range over time," he said.

The latest increase was in line with market expectations, with each of the four major banks predicting the Reserve Bank board would raise interest rates 25 basis points at its final meeting of 2022.

The decision came after the board's under-fire governor last week apologised to Australians who had taken out mortgages after the central bank had predicted rates wouldn't rise until 2024.

"I'm certainly sorry if people listened to what we'd said and then acted on what we had said and now regret what they had done. So that's regrettable. I'm sorry that happened," Dr Lowe told a senate estimates hearing.

One of the factors fueling inflation is the price of gas, which skyrocketed after Russia's invasion of Ukraine set off a global energy crisis.

Prime Minister Anthony Albanese will convene a virtual meeting with his state and territory colleagues on Friday, as he finalises a plan to intervene in the market to bring down energy prices.

The meeting was scheduled for Wednesday but had to be delayed after Mr Albanese tested positive to COVID-19.