By ROD McGUIRK
CANBERRA, Australia (AP) — Australia’s central bank has surprised markets by increasing its benchmark interest rate by a quarter percentage point to 3.85% despite pausing its climb last month and new evidence that inflation is slowing. The Reserve Bank of Australia’s meeting on April 4 was the first in a year to leave rates on hold to allow time for the bank’s board to observe the impacts of recent hikes. Most economists expected the cash rate would remain steady at 3.6% at the bank’s May meeting on Tuesday. Last week, the Australian Bureau of Statistics reported that inflation in the March quarter had slowed to 7% from 7.8% in December. Bank Gov. Philip Lowe says inflation remains too far outside his bank’s target range of 2% to 3%.