Business, industry, unions and farmers are urging all lenders to pass on in full the latest interest rate cut by the central bank.
The Reserve Bank of Australia (RBA) cut the cash rate by 25 basis points to an all-time low of 2.5 per cent at its monthly board meeting, as widely anticipated by economists.
It was the first reduction since May.
RBA governor Glenn Stevens had previously noted that the inflation outlook could provide some scope to ease policy further, should that be required to support demand.
"At today's meeting, and taking account of recent information on prices and activity, the board judged that a further decline in the cash rate was appropriate," he said in a statement.
It will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.
ACTU President Ged Kearney said the RBA's decision will be a huge relief to households and businesses.
"It means that families struggling with cost of living at the moment will be able to cope that little bit better," she told reporters in Melbourne.
National Farmers' Federation president Duncan Fraser said the rate cut was "great news" for farmers and agribusinesses.
"We urge all banks to pass today's rate cut on in full," he said in a statement.
National Australia Bank was quick to oblige among the big four banks, lowering its standard variable home loan rate by the full 25 basis points to 5.88 per cent.
The Housing Industry Association has been urging the RBA to reduce interest rates in order to add fuel to what is still a fledgling residential construction recovery.
"Clearly a rate reduction was needed," its senior economist said in a statement.
But he said interest rates are only one part of the housing equation, and that the weakness in the market is being compounded by the huge tax burden on new home building, impediments on releasing suitable residential land, and excessive regulation of the industry.
"We look forward to these issues being addressed during the election campaign," he said.
Australian Retailers Association executive director Russell Zimmerman described the RBA as stepping in to "save the furniture", especially in the face of a lack of economic leadership and an upcoming election campaign.
"The RBA have provided some relief to Australian retailers, although it is concerning that this cut has come on the back of flat retail sales, predictions of rising unemployment and falling consumer and business confidence," he said in a statement.
