Official interest rates in Australia are at their lowest level in more than five decades after the Reserve Bank lowered the OCR to 2.75% from 3% on Tuesday.
The ABC reports the rate is now at the lowest level since the bank started targeting inflation in the early 1990s. it is also lower than the official cash rates (or their equivalents) for 53½ years, according to data compiled by CommSec.
RBA Governor Glenn Stevens placed great emphasis on the high Australian dollar and very low growth in borrowing by households and businesses.
"The exchange rate ... has been little changed at a historically high level over the past 18 months, which is unusual given the decline in export prices and interest rates during that time," he noted in a statement on Tuesday afternoon.
"Moreover, the demand for credit remains, at this point, relatively subdued."
The RBA's primary goal since the early 1990s has been to keep the Consumer Price Index somewhere between 2% -3% on average over the course of the economic cycle.
Recent Bureau of Statistics inflation figures put the CPI at 2.5%, or slightly lower still if the more volatile price movements were excluded.
Mr Stevens said the slow growth in consumer prices, combined with relatively restrained wage increases, has given the bank scope to lower the official cash rate without worrying too much about sparking an inflation breakout.
"Recent data on prices confirm that inflation is consistent with the target and, if anything, a little lower than expected," he observed.
"Growth of labour costs has moderated slightly over recent quarters while productivity growth appears to be improving. This should help to lessen increases in prices for non-tradables (mostly services, and therefore labour intensive)."
The Australian dollar slumped on the decision, falling about 0.6 of a cent to 101.85 US cents by 3:16pm (AEST).
Two-speed economy
Australia's economic growth in recent years has been fuelled by the growing demand for its commodities, such as iron ore.
That resulted in a resources boom in Australia and helped it sustain growth through the global financial crisis.
However, as demand from key markets such as China has eased, the BBC reports there have been concerns that Australia's mining sector may see its growth slow.
Other areas of the country's economy have not done so well, resulting in a two-speed economy.
To make matters worse, the Australian currency has strengthened - making its exports more expensive, as well as affecting sectors such as manufacturing and tourism.
It rose nearly 9% against the US dollar between June 2012 and April 2013.
