Australia's central bank raises interest rate to 11-year high

Yet another central bank decides not to wait out the credit crunch. Bloomberg reports:

Reserve Bank policy makers boosted the benchmark rate a quarter-point to 6.75 percent in Sydney today, the second adjustment in three months. Twenty-two of 27 economists surveyed by Bloomberg News forecast another increase by March. The nation's currency climbed close to a 23-year high.

[Governor Glenn] Stevens said fallout from the global credit crunch has been "less pronounced" in Australia, as Asia's appetite for commodities drives economic growth. He became the first governor to raise borrowing costs during an election campaign, a move that may curb consumer confidence and dent Prime Minister John Howard's chance of winning a fifth term on Nov. 24...

"By the March quarter of next year, both headline and underlying measures of inflation are likely to be above 3 percent," Stevens said in a statement. "Reports of high capacity usage and shortages of suitable labor persist. Growth in aggregate demand will need to moderate."

In contrast, the next rate hike from the Bank of Japan seems to be taking forever to come, and yesterday's reports that the Cabinet Office's leading index fell to zero percent in September while the Conference Board's leading index for Japan decreased 1.3 percent aren't likely to hasten it.

The news from the euro area yesterday was a little better, the Royal Bank of Scotland Group Plc's services index rising to 55.8 in October from 54.2 in September. Nevertheless, no rate hike is expected from the European Central Bank's monetary policy meeting tomorrow.