Australia's central bank is keen to curb inflation

The Reserve Bank of Australia's decision follows a quarter percentage point rise last month.

The bank increased interest rates to their highest level in four years in March, despite data showing weak growth in the Australian economy.

The Sydney-based central bank said last month it was raising rates in an attempt to curb inflation.

Consumer data

"I think it was probably a line-ball call when they were looking at all the information they had to hand," said Stephen Roberts, director of research at Grange Securities.

Australian interest rates remained steady throughout 2004 on signs the booming property market was beginning to cool and demand for credit was easing.

"An uncharitable interpretation of today's decision is that the (the bank's) board is anxious that last month's rate hike may have been a mistake," said Stephen Walters, chief economist JP Morgan chief economist.

"Much more likely, however, is that officials were alarmed by the record 17% plunge in the consumer confidence index following the March tightening. Also, record high crude oil prices argue for caution."