Australia's central bank cuts interest rate to 2.25 pct

The Reserve Bank of Australia (RBA) on Tuesday cut interest rates by 25 basis points to a new record low of 2.25 percent.

It was the first time that the nation's central bank has cut rates since August 2013 and is designed to stimulate business activity and household spending in the face of lower consumer sentiment.

In its statement, the RBA said "For the past year and a half, the cash rate has been stable, as the board has taken time to assess the effects of the substantial easing in policy that had already been put in place and monitored developments in Australia and abroad."

"At today's meeting, taking into account the flow of recent information and updated forecasts, the board judged that, on balance, a further reduction in the cash rate was appropriate."

"This action is expected to add some further support to demand, so as to foster sustainable growth and inflation outcomes consistent with the target."

The Australian dollar immediately lost more than 1 U.S. cent to a new five-and-a half year low of just below 77 U.S. cents. Endi