Australian shares fell sharply on Tuesday in a decline that accelerated after the Reserve Bank of Australia raised the cash rate by more than most economists had anticipated, increasing the velocity of higher borrowing costs across the economy.

The S&P/ASX 200 Index fell 110.6 points to 7095.7 points for a decline of 1.5 per cent, while the broader S&P All Ordinaries shed 114.5 points to close at 7318.6, for a drop of the same margin.