Australia first G20 nation to raise interest rates

The Reserve Bank of Australia raised its chief interest rate today by a quarter of a percentage point to 3.25 becoming the first G-20 nation to do so.

Reserve Bank Governor Glenn Stevens signaled more increases would follow in coming months noting, "the justification for a half-century low rate is now over". Stevens expects to increase the interest rate to 3.75 by the end of 2009 and 4.25 in 2010. The Australian dollar has outperformed opposing currencies such as the dollar, pound, and yen climbing 27 percent despite expected rate increases by the Reserve Bank. The United States, United Kingdom, and Japan intend to continue their own low interest rate policies. Prasad Patkar of Platypus Asset Management is concerned the rate increase came to early stating, "The recovery may not be all that well entrenched and yet they’re starting to unwind the stimulus.”