New Zealand's central bank has raised interest rates yet again - by 25 basis points to 5.75%.

It was the fourth rate rise of the year as the bank defied government pressure over lifting rates "too often".

Financial markets had expected the bank's decision.

Rates are now back at the level before last year's terror attacks in the US, but even though the country's economy has managed to stay buoyant further rate hikes are unlikely.

Acting governor Rod Carr says interest rates may have peaked

New Zealand's acting governor, Rod Carr, said there were "promising signs" that New Zealand's inflation would "peak in the next two quarters a little lower than earlier expected".

The central bank's rate policy has become a political issue in the run-up to a general election on 27 July.

The Labour government wants to see inflation somewhere in the range of 0-3%, and Finance Minister Michael Cullen has criticised the bank for targeting a level of as low as 1.5%.

Rate rises make mortgages dearer and dampen the economy - unwelcome developments during an election campaign.

However, Mr Cullen declined to comment on Wednesday's rate decision.

Australian rates unchanged

Australia's central bank, meanwhile, steered its own course, leaving its benchmark rate unchanged at 4.75%.

This ends a run of two rate rises in as many months, which the bank had blamed on inflationary pressures.

Rates could still go up later in the year, though.

Australia's central bank governor Ian Macfarlane recently said he expected rates to go up to as high a level as 6%.