The local share market and Australian dollar have risen significantly in afternoon trade, ahead of the the Reserve Bank's latest interest rate decision.

Most economists are anticipating a 0.25 percentage point increase on Tuesday afternoon, which would bring the RBA's cash rate target to 2.85 per cent.

However, there is a one in four chance the central bank might opt for a larger 0.5 percentage point hike, according to Reuters-polled economists — particularly after the latest ABS figures showed inflation rising at its fastest pace in 32 years.

By 2pm AEDT, the Australian dollar was trading at 64.4 US cents, after gaining 0.7 per cent.

The ASX 200 was up 1 per cent, to 6,929 points. It was a big improvement, considering the benchmark stock index had briefly fallen into negative territory in morning trade.

Mining, healthcare and utilities stocks were among the best performers, including Imugene (+11.4 per cent),  Origin Energy (+3.8 per cent), and lithium companies Pilbara Minerals (+4.5 per cent), Core Lithium (+3.8 per cent) and Allkem (+4.1 per cent).

On the flip side, shares of Chorus (-3 per cent), Brickworks (-2.2 per cent), Reece (1.6 per cent) and Tesltra (-1.5 per cent) fell sharply.

Property prices continued to retreat in October, with the nation's median price dropping another 1.2 per cent to $721,018, the latest CoreLogic data revealed.

Prices fell in every capital city — and nearly every region as well — as the 2.5-percentage-point increase in rates by the RBA since May began to bite. 

Wall St slips ahead of Fed decision

A weak performance on Wall Street appears to be weighing on local investor sentiment.

The Dow Jones, S&P 500 and Nasdaq Composite fell by 0.4, 0.8 and 1 per cent respectively.

US stocks fell overnight as investors traded cautiously ahead of the Federal Reserve's interest rate decision, which will be announced on Thursday morning (AEDT).

The Fed is widely expected to raise interest rates by 0.75 percentage points, but investors will look for any clues the US central bank may slow the pace of its future rate hikes.

Hopes the Fed may pull back from its aggressive interest rate hike policy have lifted stock markets in recent weeks, with the S&P notching a gain of nearly 9 per cent over the past fortnight.

The Dow recorded its biggest monthly gain since January 1976, after jumping 14.1 per cent in October.

Shares of Apple dropped 1.5 per cent after a Reuters report said production of its iPhones could slump by as much as 30 per cent next month due to tightening COVID-19 curbs in China.

European inflation hits record high

Europe's STOXX 600 index rose 0.4 per cent, after the latest inflation data showed consumer prices climbing at a record pace in October.