ADELAIDE, Australia – AUSTRALIA’S central bank raised its key interest rate yesterday, the fourth increase since October, as it continues to reduce stimulus to an economy that has rapidly recovered from the global recession.

The quarter percentage point increase in the cash rate to four per cent was widely expected by economists and financial markets after Australia’s unemployment rate dropped to 5.3 per cent in January.

The Reserve Bank of Australia, as the central bank is known, said interest rates for borrowers still remain lower than average despite the series of hikes that began in October.

“With growth likely to be close to trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average. Today’s decision is a further step in that process,” the bank said in a statement.

It also cited the relatively low unemployment rate and business surveys that suggested the economy will continue to expand. The central bank reiterated that the risk of serious economic contraction in Australia had passed.

National Australia Bank senior economist Spiros Papadopoulos said he expected the cash rate would be steadily increased throughout the year.

Last October, Australia became the first major economy to raise interest rates since the onset of the global financial crisis, hiking its key rate by a quarter point from a 50-year low of three per cent.

The central bank also increased the rate at meetings in November and December but left it unchanged last month as it waited for new economic figures.