The Reserve Bank of Australia has raised the official interest rate to 4.5%.
The rise of 0.25 percentage points is the sixth rate increase since October.
The RBA says lending rates are now around average, which economists say is a sign it might stop increasing rates for now.
The ABC reports the decision was influenced by the strength of the mining boom and a higher-than-expected inflation rate and came despite debt woes in Europe.
Australia's big four banks, Commonwealth Bank of Australia, National Australia Bank, ANZ Banking Group and Westpac Banking Corporation, have raised their variable home loan rates in line with the increase.