Australia central bank leaves rates unchanged

SYDNEY - Australia's central bank left interest rates unchanged on Wednesday, holding off on a fresh move to quell inflation pressures and surprising some in financial markets.

The market was braced for a rate rise but it was far from certain one would come after the latest meeting of central bank policymakers on Tuesday.

The Reserve Bank of Australia (RBA) kept its cash rate at 5.5 per cent after raising it by a quarter percentage point in March. The central bank does not issue a statement when it leaves interest rates unchanged.

Economists had given a median 60 per cent chance of a rate increase this month, according to a Reuters poll. But most also said rates would not go higher than 5.75 per cent in 2005.

Pressure has been rising for the RBA to tighten policy again. Unemployment in Australia is at its lowest in nearly three decades and consumer demand has been strong, both factors that can lead to inflation. A private survey this week showed rising consumer price inflation.

The RBA tightened policy twice at the end of 2003 but kept rates steady throughout 2004 on signs that a red-hot property market was cooling and demand for credit was easing.

- REUTERS