The Reserve Bank of Australia (RBA) has raised the cash interest rate by 25 basis points to 3.75 per cent.

Stronger-than-expected construction activity will have added to economic growth in the third quarter, and could give the central bank ammunition to slug borrowers with a pre-Christmas rate rise

Fund manager Fat Prophets Australia Fund warns there is an air of false euphoria about the recent share market recovery, given there are still large debts which aren't matched by the underlying asset values.

The Australian economy is now on a recovery path after emerging from one of mildest downturns on record, which has highlighted the nation's sensible macroeconomic policies and demand for the nation's resources from Asia, the central bank said.

Everyone, even the RBA, is assuming the central bank will raise interest rates further but no one knows by how much

Economists believe homeowners will face another increase in their mortgage rates next month

The Australian dollar opened firmer on Wednesday after hitting a near 14-month high as the first rate rise by the central bank in 19 months lifted the currency.

The official cash rate is likely to rise to 4 or 4.5 per cent by the end of next year, a leading economist says.