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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.

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