Official Australian interest rates cut

The Reserve Bank of Australia (RBA) on Tuesday cut official interest rates by 25 basis points to a record Australian low of 2 percent.

After cutting rates by 25 basis points in February, the bank had kept the cash rate steady, despite economist's expectations of an earlier cut.

The RBA's move on Tuesday was aimed at improving economic growth and lowering a resurgent Australian dollar, in line with RBA policy.

But the move could see commercial mortgage rates below 4 percent for the first time in generations, and further fuel an already hyper Australian property market.

A week before the government is expected to reveal a blowout in borrowing and spending in its upcoming budget, the RBA has signaled it believes the economy is weakening and requires further stimulus.

"At today's meeting, the board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand," Reserve Bank of Australia governor Glenn Stevens said in a statement.

The bank said falling commodity prices, weak business investment and subdued government spending were slowing the economy.

"The economy is therefore likely to be operating with a degree of spare capacity for some time yet," governor Stevens said. Enditem