Treasurer Joe Hockey says a cut to interest rates is good news for business and households.
The Reserve Bank on Tuesday cut the cash rate by a quarter of a percentage point to a new record low of 2.25 per cent.
"This is good news for Australian families and it's good news for Australian business," Mr Hockey told reporters in Canberra.
"The government is working hard to take the pressure off interest rates by keeping inflation low."
Mr Hockey said combined with a fall in petrol prices Australians had received the equivalent of a three-quarter of one per cent cut in interest rates.
The treasurer said the Reserve Bank had "more room to move".
Mr Hockey said the rates decision would lift business and consumer confidence.
"The shackles are off the Australian economy," he said.
"I say to Australian business ... go out there, have a go, employ more Australians because the costs of doing business are down."
The treasurer said he expected the banks to pass on the cut immediately across the credit spectrum and not just limit it to home loans.
An International Monetary Fund report due out within days would show global economic headwinds remain of concern, he said.
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