The Reserve Bank of Australia has decided to increase the nation’s interest rate by 25 basis points, taking it to 4.75%.
The change is the first since May of this year, since when it was held steady at 4.5%.
In a statement, the governor, Glenn Stevens, said that growth remained subdued in the US and Europe but was above trend rates in the rest of the world.
After the financial crisis, Australia is now in a stronger position and private spending is forecast to increase in coming years as confidence rises.
Inflation is around 2.5%, but could rise in the medium term, hence the tightening of monetary policy at this stage.
In the UK, speculation about further quantitative easing has abated recently, due to the better than expected 0.8% rise in GDP during the third quarter.
However, there remains little prospect of rates rising about the historic low of 0.5%.