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Australia's central bank, contrary to what many analysts had been anticipating,  left the  benchmark interest rate  as is at 3.75 percent, stating that financial establishments had raised  their lending rates higher than the recent cash rate hikes and that  it needs  more time to get a clearer picture of the outcome of the three successive rate increases since October.

Higher interest rates were pointed out as one of the  causes for the drop in business confidence in the previous month to its lowest level in six months.

The rate freeze caused the Australian dollar  to drop by $0.01 to $0.88.

Treasurer Wayne Swan said that the pause in interest rate hikes is a welcome relief to families and businesses that are repaying mortgages or loans. 

Peter Anderson of the Australian Chamber of Commerce and Industry called RBA's decision a "timely breather for business borrowers". 

The RBA says Australia's economy is stronger than expected, but businesses are borrowing less and finding it harder to borrow.

Thus, the RBA decision is an indication that it exercised  more caution in its analysis of the  underlying economic figures, willing to wait until it sees clearer waters ahead.

On the other hand, the central bank mentioned that  if economic conditions progress broadly as anticipated, additional  rate increases may be necessary  to make sure that inflation stays consistent with the medium term target, according to Glenn Stevens,  RBA  governor.

Peter Jolly of the National Australia Bank expects more rate hikes  coming up: "This is a pause, not a stop. It's just that they paused earlier than most thought."