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Last Updated: Tuesday, 5 February 2008, 12:00 GMT
Australia raises interest rates
House being built in Sydney
A strong property market has contributed to rising inflation
Australia has raised interest rates to an 11-year high of 7%, as part of efforts to control rising inflation.

The rise comes as other major central banks are cutting interest rates to ease an economic downturn.

Australia's resource-rich economy has continued to expand due to a sustained rally in commodity prices.

Chinese demand for raw materials has allowed Australia to lessen its reliance on the United States, which is on the brink of a recession.

The Reserve Bank of Australia has raised the cost of borrowing 11 times since 2002.

"Having both the international and domestic information available, the board concluded that a tighter monetary policy stance was needed now," said Glenn Stevens, the bank's governor.

Prices rising

Inflation is running at an annual rate of 3.6%, above the bank's comfort zone of 2% to 3%.

A recent drought has put pressure on food, water and utility prices while rents have soared amid a strong housing market.

The United States has cut rates aggressively this year in an effort to prevent the economy from falling into a recession.

The Bank of England is expected to cut interest rates after its meeting on Thursday. The European Central Bank has also expressed concerns about growth.

SEE ALSO
Australia rate rise threat grows
24 Oct 07 |  Business
Australian growth beats forecasts
04 Sep 07 |  Business
Australian rates at 10-year high
08 Aug 07 |  Business
Australia seeks skilled workers
08 May 07 |  Business
Australia's economy picks up pace
07 Mar 07 |  Business
Drought drag on Australian growth
20 Dec 06 |  Business

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