The Reserve Bank of Australia is expected to cut its official cash rate by 25 points on Tuesday, which would put it on a par with the Reserve Bank of New Zealand's official cash rate of 2.5%.
Fuelling expectations of an Australian cut are lacklustre economic growth reports, sluggish jobs growth and subdued inflation.
In a speech in Sydney on Tuesday, RBA Governor Glenn Stevens expressed concern at the persistently weak level of business confidence.
He said uncertainty over the international economy and the shift to a new phase of the mining boom are dragging down the mood.
Dr Stevens said monetary policy must reflect the pressures being felt in Australia's economy.
He also signalled that soft inflation report the previous week meant the Reserve Bank still had scope to cut rates further if needed.
