A growing number of economists believe homeowners will face another increase in their mortgage rates next month after the Reserve Bank of Australia (RBA) board felt it was “imprudent” to keep the official interest rate low.

And next week’s release of the Consumer Price Index (CPI) could determine whether it’s a 25- or 50-basis-point increase, economists say.

The minutes of this month’s board meeting – where the central bank lifted the cash rate for the first time in 19 months – said that downside risks to the economy had “diminished significantly” over recent months.

“This meant that the balance of risks was now such that the current very expansionary setting of policy was no longer necessary, and possibly imprudent,” the minutes said.

JP Morgan chief economist Stephen Walters said the insertion of the word “imprudent” was a slap in the face to his call that the RBA would keep the cash rate steady at the Melbourne Cup Day board meeting.

“If the prevailing 3.0 per cent cash rate two weeks ago stood a reasonable chance of being `imprudent’, so does today’s 3.25 per cent,” Mr Walters said, who now expects a 25-basis-point increase next month.

TD Securities senior strategist Annette Beacher said that if next week’s inflation reading showed an “outsized” increase, the RBA could well raise the cash rate by 50 basis points.

The minutes showed the board now expected the trough in inflation to be significantly higher than earlier thought.

“Keeping interest rates at very low levels for an extended period could, therefore, threaten the achievement of the inflation target over the medium term,” the minutes said.

Treasurer Wayne Swan said the minutes also highlighted the need for caution in coming months.

“We must be very cautious as we move forward because there is still an uncertain international environment,” Mr Swan told parliament.

However, the RBA’s use of the word “imprudent” sparked a heated exchange during question time.

Opposition Leader Malcolm Turnbull asked the treasurer whether it was “imprudent” for the government to continue with its stimulus spending.

Mr Swan accused Mr Turnbull of “verballing” the central bank board, and that the minutes were saying nothing different from what they had said for a longer period of time.

“(The opposition) resent that our economic stimulus, working hand in glove with the monetary policy stimulus from the Reserve Bank, has produced one of the most outstanding results in the world,” he said.

“There is nothing in these minutes other than the Reserve Bank is beginning to unwind monetary policy stimulus because the economy is beginning to grow.”

In answer to another question, Mr Swan said the RBA recognised that the government’s fiscal stimulus had already peaked and was beginning “to taper away”, as did the Australian people.

He said confidence remained strong for both business and consumers, reflecting the impact of the stimulus that “kept customers going through the (shop) door, kept more Australians in work” and helped Australia defy “global economic gravity”.

A new survey by Essential Research found most Australians backed the government’s handling of the economy and its stimulus measures, and believe the economy would have been in a worse state from the global economic crisis if the Liberal Party had been in power.