The Reserve Bank of Australia raised its benchmark interest rate to 3.25 percent, Tuesday, up from three percent. The Reserve Governors say "with Australia's economic growth on track and the risk of a serious contraction past, it is time to gradually raise rates from their lowest level in 49 years."
Australia's economy weakened, but did not fall into recession in the past year, because of strong demand from China and other countries for its commodities, such as iron and coal.
Australia is the first developed country to raise interest rates. The news is boosting equity markets and depressing high quality corporate bonds.