Australia paused an aggressive series of interest rate rises today, citing turmoil on global markets over Europe's debt crisis which has raised the spectre of a double dip recession.
The Reserve Bank of Australia opted to leave rates on hold at 4.5%, deciding against a fourth quarter-point hike in a row and the seventh since October.
'Interest rates to borrowers are around their average levels of the past decade, which is a significant adjustment from the very expansionary settings reached a year ago,' said Reserve Bank of Australia governor Glenn Stevens.
Australia's stock market and national currency have fallen sharply over the past month as investors were rattled by debt problems in Greece, Spain and elsewhere which have prompted emergency action by European leaders.
The economy has also been overshadowed by a row over a new tax on the key resources sector, which has helped drive Australia's strong recovery from the financial crisis.
The rates decision followed mixed data earlier today, with April retail sales up a better-than-expected 0.6% from a month earlier but housing building approvals down 14.8%.
Treasurer Wayne Swan said the decision would be welcomed by mortgage holders and businesses who have come under pressure after rates shot up from 49-year lows of 3% last September.
Stevens said markets had been preoccupied by Europe's problems, which are blamed for losses of 110 billion Australian dollars ($93 billion US) at the Sydney bourse and a 10 US cents drop in the local currency last month.
Meanwhile, Canada's central bank raised its key lending rate from a record low to 0.5% today, becoming the first G7 nation to tighten interest rates after the global economic crisis.
The rate hike follows 'robust' economic growth in the first quarter of 6.1%, led by housing and consumer spending. But it was less than analysts had expected.
The Bank of Canada said it remained cautious about the possibility of renewed weakness in Europe and an increasingly uneven global economic recovery. Employment growth has resumed in Canada.
