BY ALEX FRANGOS AND JON HILSENRATH

Australia on Tuesday became the first Group of 20 country to raise interest rates since the start of the financial crisis, setting the stage for a market-rattling divergence among the world's central banks.

Nations such as Australia, Israel, Norway and Brazil that remained relatively isolated from the economic turmoil of the past 12 months for various reasons now appear to be leaning toward tightening their interest-rate policies to head off inflation.

But central banks in the big economies at the center of the crisis, including the U.S., Europe and the U.K., are still nursing wounded economies and look likely to ...