The Reserve Bank of Australia has cut interest rates to an all-time low but already economists are wondering if more will be needed to get the country's economy moving.
The RBA has cropped the official cash rate to 1.5 per cent in a bid to boost Australia's sluggish inflation rate, which at one per cent is at a 17-year low and well outside the bank's desired two to three per cent target band.
RBA governor Glenn Stevens said very subdued growth in local labour costs and very low cost pressures globally meant inflation was expected to remain low for some time.
Getting inflation back in the target range and reaching a sustainable economic growth level " would be improved by easing monetary policy at this meeting," Mr Stevens said in a statement on Tuesday.
JP Morgan chief economist Sally Auld said the RBA was reacting to weak inflation, but trying not give any indication of its next move.
"These guys have confirmed that inflation remains quite low," she told AAP.
"That was where the cut came from and I think from here these guys sit back and wait. The next question they need to address is how persistent this period of low inflation is going to be."
Commonwealth Bank managing director of economics Michael Blythe said as the focus was clearly inflation, the Reserve Bank may not be done with one cut before the end of the year.
"I expect, as we see the RBA's inflation forecasts on Friday, they will still show inflation remaining extremely low and keep alive the prospect of another rate cut later this year," he told AAP.
"We've had two cuts in our forecast for while.
"We've just had the August one and we think there's a good chance of another one in November."
Mr Blythe noted the biggest element of the RBA's rates statement related to housing, an indication the central bank remained concerned about the potential of a rate cut to again stimulate housing prices.
"There's lot of explanation about why that's not going to happen," he added.
"We'll see I guess."
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