Australia raises growth forecasts

With a leap from 0.5% to 1.75%, it has more than tripled its growth forecast for this year while at the same time raising the initial 2010 forecast from 2.25% to 3.25%.

When Australia increased its interest rate from 3.25% to 3.5%, it became the first G20 country to do so.

Having only contracted in the last 3 months of year 2008, it was one of the few economies which had managed to avoid recession.

Based on the quarterly Statement on Monetary Policy by the RBA, it seems that as the economy expanded, the interest rates would have to rise accordingly.

RBC Capital Markets' senior economist, Su-Lin Ong stated that based on population, resources and Asian demand, the RBA here is predicting expansion which will be going on for years.

This means none other than having a positive big picture for the Australian dollar and Australia with rates going right up.

The Australian dollar had been gaining steadily against the euro, sterling and the US dollar. As for this week itself, the US Fed, Bank of England and European Central Bank had their interest rates remaining at very low levels.

Countries such as China and India which have a strong demand for Australia's resources like iron ore and coal would serve as a basis for Australia's growth economically.