Australia raises rates for second month in a row

Australia's central bank today raised interest rates by a widely-tipped 25 basis points for a second successive month to 3.5 per cent, citing strong growth in China and better prospects across Asia.

Central bank governor Glenn Stevens said Australia's major trading partners in the region were experiencing "noticeably better" conditions.

"Growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets," Stevens said.

Australia last month became the first advanced economy to raise interest rates since the global financial crisis, declaring the risk of a recession was over.

Economic conditions had been stronger than expected and measures of confidence had improved thanks to government stimulus measures, and private investment appeared not be as weak as forecast, Stevens said.

Housing and public infrastructure spending were accelerating, and Stevens said there were early signs of an improvement in labour market conditions.

"The rate of unemployment is now likely to peak at a considerably lower level than earlier expected," he added.