RBA raises the bar for further rate increases

SYDNEY - The Reserve Bank of Australia (RBA) signaled a higher bar for interest-rate increases after becoming the world's first major central bank to withdraw "emergency" stimulus used during the global financial crisis.

Governor Glenn Stevens raised the benchmark rate for a sixth time in seven meetings, to 4.5 percent, and said lending costs are back to "average" for most borrowers. The bank will hold off on a boost next month, according to all 24 economists surveyed by Bloomberg News after Tuesday's decision.

Stevens' job is now to decide whether surging investment in mines, along with a 20 percent jump in house prices and rising commodity costs, will push inflation above the bank's 2 percent to 3 percent target range without further action. One keen observer: Prime Minister Kevin Rudd, who faces an election within a year and may be vulnerable should rates start to erode households' purchasing power.