Australia keeps its key rate unchanged

SYDNEY: Australia's central bank unexpectedly paused in raising interest rates as Governor Glenn Stevens opted to support the economy's acceleration and stem inflation later.

The Reserve Bank of Australia kept the overnight cash rate target at 3.75 percent after three increases, it said in Sydney yesterday. The decision confounded the forecast of all 20 economists in a Bloomberg News survey for a quarter-point move, and futures contracts that signaled a 74 percent chance of an increase.

Australia's dollar tumbled to a six-week low and Asian stocks pared gains after the announcement sparked concern at the economy's ability to withstand higher borrowing costs. Business confidence fell to a six-month low, a report showed yesterday, and Woolworths Ltd, the country's biggest retailer, warned last week that rate increases would hurt consumers.