Australian central bank hikes rates for third month in a row

AUSTRALIA&rsquo;S central bank yesterday hiked interest rates for the third consecutive month by 25 basis points to 3.75 per cent, citing strong employment growth, improving business confidence, and solid export demand from Asia.<br /><br />The country was the only major Western economy that has managed to escape recession &ndash; it experienced just one quarter of contracting GDP &ndash; and it has benefited from its geographical proximity to Asia-Pacific and its wealth of natural resources.<br /><br />The governor of the Reserve Bank of Australia (RBA) Glenn Stevens said: &ldquo;With the risk of serious economic contraction in Australia having passed, the Board has moved at recent meetings to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker.&rdquo;<br /><br />&ldquo;These material adjustments to the stance of monetary policy will, in the Board&rsquo;s view, work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead,&rdquo; he added.<br /><br />The RBA was the first Western central bank to raise interest rates and yesterday&rsquo;s meeting marked the first occasion on which the RBA has chosen to raise the cost of borrowing for three months in a row.