The Reserve Bank of Australia's interest rate increase this month was "finely balanced,"

- The Reserve Bank of Australia's interest rate increase this month was "finely balanced," according to minutes of the central bank meeting released Tuesday.

The minutes indicate a gradual improvement in economic activity and moderate inflation were among the decisive factors.

At the November 2 meeting, the bank's policy committee raised the cash rate by 25 basis points to 4.75 percent, effective November 3.

The minutes showed the bank's staff projected GDP growth to be "broadly similar to that at the time of the August Statement on Monetary Policy."  GDP was expected to expand 3.5 percent over 2010, with growth picking up to the 3.75 to 4.0 percent range over 2011 and 2012.  CPI increased 0.7 percent in the September quarter to 2.8 percent year over year.

"This was a slightly smaller rise than had been expected three months earlier, partly reflecting a surprising fall in food prices and lower fuel prices," the RBA minutes said.

The policy makers also said interest rates charged by banks for loans might increase by more than the cash rate.

"With only a relative amount of spare capacity in the economy, a gradual upward trend in inflation remained likely over the medium term," the RBA said.

On a global scale, the RBA board noted that downside risks had not materialized "in any significant way," and that the uncertain outlook for China's economy had lessened, commodity prices strengthened and the outlook for investment had firmed.

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