SYDNEY, Nov 2 (Reuters) - Australia"s central bank on Tuesday took a major step toward unwinding extraordinary pandemic stimulus policies by abandoning an ultra-low target for bond yields and opening the door for an earlier hike in cash rates. Wrapping up its November policy meeting, the Reserve Bank of Australia (RBA) kept the cash rate at a record low of 0.1% but dropped its 0.1% target for the April 2024 government bond. The central bank also omitted its previous projection that rates were unlikely to rise until 2024, reflecting an improving economy and a recent surprisingly high reading for inflation. It would, however, continue to buy government bonds at a pace of A$4 billion ($3.00 billion) a week until at least mid-2022 and emphasised that inflation was still too low. "The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2.5% at the end of 2023 and for only a gradual increase in wages growth," Governor Philip Lowe said in a brief statement. The bank had already given up any pretence of defending the bond target as yields flew to 0.73% after the market suffered one of its worst monthly drubbings in decades. The RBA has been under intense pressure to alter course since data out last week showed core inflation had jumped back into its 2-3% target band two years earlier than forecast. That is just part of a global sea change as surging energy costs and supply bottlenecks force central banks from Europe to North America to consider bringing forward tightening. The shift has been abrupt for the RBA, which had spent the past year vowing rates would not rise until 2024 and only recently chastised markets for thinking otherwise. And investors were still wagering the central bank was behind the curve as futures were almost fully priced for a rise to 0.25% by May next year. It is almost 11 years since the RBA last raised rates, setting them at what would now be an unbelievably high 4.75%. While the market has a series of hikes priced in, it does not see rates getting much above 1.75% in this cycle partly because households are far more indebted than in the past. Wages growth in Australia has also lagged badly at an annual 1.7%, well below the 3%-plus policymakers believe is needed to keep inflation sustainably in the 2-3% band. Yet super-low borrowing costs have managed to inflate a bubble in house prices which climbed almost 22% in the year to October, and by a quarter in Sydney. read more The RBA has so far resisted calls to use rates to cool the market, arguing it would only slow the economy and cost jobs, but the main banking regulator has tightened lending standards. "Macro-prudential tightening will act as a break on housing, and fiscal policy will also act as a drag," said Frank Uhlenbruch, an investment strategist at Janus Henderson. "Our view is that the tightening profile implied by the market risks triggering a major slowdown over 2023," he added. "Faced with these uncertainties, we expect the RBA to make haste slowly, commencing a tightening cycle from mid-2023 onwards." ($1 = 1.3340 Australian dollars) Reporting by Wayne Cole; Editing by Sam Holmes