Australia - Central bank raises rate from 49-year low

Australia’s central bank unexpectedly raised its benchmark interest rate from a 49-year low and signaled further increases in the coming months amid signs the economy is strengthening. Reserve Bank Governor Glenn Stevens increased the overnight cash rate target to 3.25% from 3% in Sydney yesterday. Only one of 20 economists surveyed by Bloomberg News forecast this move. The rest predicted no change. The local currency jumped to the highest level in 14 months as Australia became the first G-20 nation to boost borrowing costs since the start of the global financial crisis more than a year ago. Rising job vacancies, retail sales and house prices, plus surging business and consumer confidence support Stevens’ view that the “basis for such a low interest rate setting has now passed.” (Bloomberg)