Australia raises interest rates

AUSTRALIA’S central bank has raised interest rates to 4.25 per cent from four per cent as it attempts to slow inflation and rises in house prices.

The move is the fifth rate rise since October, and the bank has indicated there are further increases to come.

Glenn Stevens, the Governor of the central bank, said: "Australia’s terms of trade are rising, adding to incomes and fostering a build-up in investment in the resources sector.

"Under these conditions, output growth over the year ahead is likely to exceed that seen last year, even though the effects of earlier expansionary policy measures will be diminishing."

The country avoided falling into recession, recording just one quarter of negative growth at the end of 2008.