SYDNEY, Feb 21 Reuters Australia39;s central bank, startled by the risk that inflation could prove stickier than previously thought, abandoned all thought of pausing at its February policy meeting and signalled more rate hikes would be needed in the months ahead.

Minutes of the Feb. 7 policy meeting out on Tuesday showed the Reserve Bank of Australia39;s RBA Board only discussed two options hiking by 50 basis points or 25 bps. That was a marked change from December when it had considered staying pat.

A pattern of upward surprises on inflation and wages had argued for the larger move, the minutes showed.

The Board settled on a quarterpoint hike, which brought the cash rate to a fresh decadehigh of 3.35, noting an uncertain global outlook, the flexibility it has through the monthly meetings, and the already substantial increase in rates so far.

Rates have climbed 325 basis points since last May, easily the most aggressive tightening in modern history

The recent inflation data had suggested more breadth and persistence in inflation than had been expected and that strong demand was leading to price increases in some parts of the economy, the minutes said.

While inflation was expected to decline, there was a risk that it could persist at an uncomfortably high level, which would entail longer term costs.

Board members agreed that further increases in interest rates are likely to be needed over the months ahead, consistent with market pricing.

The hawkish turn…