Australian central bank shocks markets by halting series of rate rises

Telegraph (UK) ^ | February 2, 2010

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Australia’s central bank kept interest rates on hold today in a move that confounded economists and send the country's currency tumbling.

The decision by the Reserve Bank of Australia to keep its benchmark interest rate at 3.75pc comes after three consecutive increases by the bank. All of Sydney's top economists surveyed by Bloomberg News had expected an increase to 4pc, as had financial markets.

Glenn Stevens, the head of the Reserve Bank, said interest rates were kept on hold because information about the impact on the economy of earlier rises is "still limited." Australia was the first country in the world to raise interest rates last year and today's decision will focus attention on whether the economy is robust enough to stand interest rates higher than 3.75pc.