Australia's central bank cut its policy cash rate Tuesday by half a percentage point to 3.75%, surprising markets that had been expecting a quarter-point cut. "In considering the appropriate size of adjustment to the cash rate at today's meeting, the board judged it desirable that financial conditions now be easier than those which had prevailed in December," said Reserve Bank of Australia Gov. Glenn Stevens in a statement accompanying the decision. "A reduction of 50 basis points in the cash rate was, in this instance, therefore judged to be necessary in order to deliver the appropriate level of borrowing rates," Stevens said. The Australian dollar fell following the announcement to $1.0334 from $1.0398 while the S&P/ASX 200 stock index traded up 0.9% at 4,437.00.

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