An RBA surprise: Australia hikes key rate

The Reserve Bank of Australia became the first major central bank to increase interest rates amid signs the global economy is recovering, hiking its key lending rate by 25 bp to 3.25%.

The RBA said the "global economy is resuming growth," and "the recovery will likely continue during 2010 and forecasts are being revised higher." Despite doubts in some corners, the central bank noted that "growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets."

More rate increases seem likely as the RBA said, "It is now prudent to begin gradually lessening the stimulus provided by monetary policy." It seems extremely doubtful that Europe, the UK, or the US will follow suit anytime soon.