Bank of Australia raises its lending rate

April 6, 2010 at 9:01 AM
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SYDNEY, April 6 (UPI) -- The central bank of Australia raised its bank-to-bank lending rate Tuesday, suggesting growing confidence in an economic recovery.

The Reserve Bank of Australia raised its lending rate 25 basis points to 4.25 percent after four previous increases brought the rate from 3 percent to 4 percent from October to March.

"The global economy is growing," RBA Gov. Glenn Stevens said in a statement, although he said the expansion was "still hesitant" in the world's major economies.

Stevens said the country's "terms of trade are rising, adding income and fostering a buildup in investment in the resources sector."

Inflation has also been held at bay, he said, largely due to slow growth in wages, which set in during the economic downturn last year, and to a rise in the currency rate.

"With the risk of serious economic contraction in Australia having passed some time ago, the board has been lessening the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker," Stevens said.

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