(FT) -- Australia's central bank has defied market predictions by lifting its official interest rate by 25 basis points to 4.75 per cent as it attempts to damp inflationary pressures as the country's economic recovery gathers pace.
The surprise move on Tuesday lifted the Australian dollar by as much as 1.1 per cent to US$0.9993.
Lifting rates for the first time since May, the Reserve Bank of Australia warned the country's economy was "subject to a large expansionary shock from the high terms of trade and has relatively modest amounts of spare capacity".
Seventeen out of 24 economists surveyed by Bloomberg had expected rates to be held steady although many had predicted an increase before the year end.
The central bank has now raised rates seven times since October last year when they hit a 49-year low of 3 per cent. Australia stood alone among the developed world by narrowly avoiding technical recession during the global financial crisis and its central bank was the first among the Group of 20 nations to begin raising rates in the aftermath of the downturn.
Canada, Norway, New Zealand and other nations have since tightened monetary policy, although not as aggressively as Australia which is enjoying boom conditions in its mining industry.
CNN
