Australia has raised its main interest rate for the second month in a row, to 3.5% from 3.25%. The move by its central bank was not unexpected as the Australian economy was the only one in the developed world to expand in the first half of 2009.

In fact, Australia managed to avoid recession, only seeing its economy contract in the last quarter of 2008.

And the release of the lowest inflation figures in 10 years last week added to expectations of a modest rate rise.

Australia has spent heavily on schemes including cash handouts for pensioners and for low and middle-income families, and a number of infrastructure projects.

This helped the economy to grow 0.4% in the first quarter of this year, and by 0.6% in the second, rebounding from the 0.5% contraction between October and December 2008.

Categories: Forex, US Markets, World Economy
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