RBA governor Lowe says interest rate cut alone won't help

Reserve Bank Governor Philip Lowe has again called on government to pull its weight after the central bank cut the cash rate for the second month in a row.

Reserve Bank Governor Philip Lowe has again called on government to pull its weight. (AAP)

Reserve Bank Governor Philip Lowe says two interest rate cuts in as many months should put the economy on a "better path" but he has again called on the government to pull its weight.

The RBA on Tuesday cut the official cash rate to a fresh record low 1.0 per cent and left the door open for another before Christmas as global trade uncertainty and low wage growth continues to weigh on inflation.

Dr Lowe said monetary policy had a significant role to play in hitting its inflation goal but he again called on government to lend a hand by loosening its purse strings.

"It is appropriate to be thinking about further investments in (infrastructure), especially with interest rates at a record low, the economy having spare capacity and some of our existing infrastructure struggling to cope with ongoing population growth," Dr Lowe said in a dinner speech to the business community in Darwin on Tuesday night.

The first consecutive 0.25 percentage point cut since 2012 had been widely anticipated after Dr Lowe suggested last month one alone would not be sufficient to reduce spare capacity in the labour market.

Reserve Bank Governor Phillip Lowe. Source: AAP

Dr Lowe also said structural policies were needed to support businesses to expand, invest, innovate and employ people.

"A strong, dynamic, competitive business sector generates jobs," Dr Lowe said on Tuesday.

"It can help deliver the productivity growth that is the main source of sustainable increases in our wages and incomes."

Dr Lowe said while the Reserve Bank's monetary policy framework was centred on the inflation target, the ultimate objective was to promote the collective economic prosperity of Australia.

"In the Board's judgement, the easing of monetary policy last month and this month will help promote our collective welfare," he said.

Last month's cut - the first move in any direction since August 2016 - came a day before the release of another disappointing quarterly GDP result and 10 days before unemployment was shown to have remained unchanged at an unsatisfactory 5.2 per cent.