SYDNEY, October 6, 2009 (AFP) – Australia on Tuesday became the first advanced economy to raise interest rates since the global financial crisis and promised more rises to come, boldly declaring the risk of recession over. The central bank announced a rise of 25 basis points to 3.25 percent, lifting rates off a 49-year low after an aggressive round of cuts credited with helping fight off the worst global downturn since the Great Depression.
“That basis for such a low interest rate setting has now passed, however,” Reserve Bank of Australia (RBA) governor Glenn Stevens said in a statement.
“With growth likely to be close to trend over the year ahead, inflation close to target and the risk of serious economic contraction in Australia now having passed, the Board’s view is that it is now prudent to begin gradually lessening the stimulus provided by monetary policy.”
Australia is the only major Western nation to avoid a recession in the worldwide slump and posted growth of 0.6 percent in the three months to June — the best in the developed world.
The RBA had slashed the rate from 7.25 percent last September to 3.0 percent in April, the lowest since 1960, while the government unveiled a massive 70 billion do