The RBA raised its cash rate target a further 25 basis points to 4.25%. The fifth rise since October 2009, the gap between relative interest rates between Australia and other industrialised countries has widened further in 2010 as the economies of Europe and the US remain as yet subdued.
With a surge in revenue now about to wash into the economy on the back of sharply higher coal and iron ore export prices, the hike has brought rates back into what is a normal range just as economic growth strengthens according to the RBA.
"The Board judges that with growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average," RBA Governor Glenn Stevens said.