European interest rate rise bodes well for Australia

The European Central Bank has raised its key interest rates to a five-and-a-half-year high. As expected, ECB raised the rate by 25 basis points to 3.75 per cent overnight.

Stockbroking firm Ausbil Dexia says the rate rise signals Europe is experiencing a surprising level of economic growth.

The firm's chief economist, John Honan, says that means the economies of Europe, Japan and the US are now performing well and the forecast for Australia is bright.

"The tide from the three major economic blocs is quite positive," Mr Honan said.

"Overlay that with China and India, and Australia can't help but perform quite well over the course of 2007 with that international momentum." - © 2007 Australian Broadcasting Corporation