In Australia, Interest Rate Is Raised a Fifth Time

In Australia, Interest Rate Is Raised a Fifth TimeThe Australian central bank raised its key interest ratedvd to aviTuesday by aNeedle Feltquarter of a percentage point to 4.25 percent, in a sign that it thought that the Australian economy was on solid enough footing to be weaned off the low rates.

It was the central bank’s fifth rate increase in six months. Australia began nudging the cost of borrowing up last October, becoming the first major economy to do so since the global financial crisis in late 2008.

Analysts had been divided on whether the Reserve Bank of Australia would venture to raise rates again in April. But the central bank appeared to have been swayed by the fact that the housing market remained strong despite the previous interest rate increases.

International concerns about a possible default by deeply indebted Greece and the global consequences of such a development also have waned in recent weeks.

“New loan approvals for housing have moderated over recent months as interestNeedle Feltrates have risen and the impact of large grants to first-home buyers has tailed off,” Glenn Stevens, governor of the Reserve Bank of Australia, said in a statement accompanying the rate announcement on Tuesday.

“Nonetheless, at this point, the market for established dwellings is still characterized by considerable buoyancy, with prices continuing to increase in the early part of 2010.”

This prompted analysts on Tuesday to forecast still more rate increases by the Reserve Bank of Australia, possibly as soon as next month.

"The R.B.A. appears to have decided on a more pre-emptive path: Raise rates now to deflate the housing bubble before it gets into full swing," Fred Neumann, regional economist at HSBCdvd to aviin Hong Kong, wroteNeedle Feltin a research note.