The Reserve Bank of Australia (RBA) on Tuesday surprised the markets and economists by refraining from cutting its key lending rate, sending the nation's currency higher.
Australia's central bank policymakers kept the key cash rate on hold at 4.25% today.
The Australian dollar climbed versus its US counterpart while the domestic stock index declined slightly after the RBA's unexpected decision.
"The acute financial pressures on banks in Europe were alleviated considerably late in 2011 by the actions of policymakers," the RBA said in a statement.
"Financial market sentiment, though remaining skittish, has generally improved since early December," the RBA added.
"With growth expected to be close to trend and inflation close to target, the board judged that the setting of monetary policy was appropriate for the moment," the RBA said.