Business

Australia interest rates rise from 3% to 4.5%

Mine in South Australia
Image caption The strength of Australia's mining sector helped it to avoid recession

Australia's central bank has raised interest rates for the sixth time in eight months as the country's economy continues to recover.

The target interest rate is now at 4.5% - up from 3% in October last year.

The decision reflects the confidence that Australian policymakers appear to have in the strength of the country's economic recovery.

Unlike Europe and the US, Australia has avoided falling into recession, helped by the country's strong mining sector.

The mining sector has in turn been helped by rising commodity prices and strong demand from developing economies including China.

'Significant adjustment'

The latest rate increase had been widely expected, but comments made by the central bank governor Glenn Stevens were being seen as indicating that the run of rate rises is at an end for now.

Mr Stevens said the increase to 4.5% from 3% last October represented a "a significant adjustment from the very expansionary settings reached a year ago".

Commonwealth Bank economist Savanth Sebastian said: "That statement indicates rate rises may be put on hold for a bit."

The growth in Australia's economy has allowed it to raise the cost of borrowing - a move which should help to curb rising inflation and house prices.

Australian property prices have risen by more than 20% in the last 12 months, according to the latest official statistics.

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