DHAKA: The Reserve Bank of Australia has cut its official cash rate by 25 basis points to a historic low of 1.75% from 2%, the first cut since May 2015.

The bank cited lower-than-expected inflationary pressures as the reason for the cut.

Data published last week showed inflation is at a record low - well below the target band of 2%-3%.

The rate cut comes hours ahead of the federal budget for 2016-2017.

‘The board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting,’ said Reserve Bank of Australia Governor Glenn Stevens in a statement, reports the BBC.

Australia has been dealing with an economic slowdown, largely due to a drop off in mining investment, which had been a driver of the resource-rich economy.

Small tax cuts and spending on health, infrastructure and education have already been foreshadowed or announced to be part of the budget.

It is also seen as an unofficial election campaign launch. Prime Minister Malcolm Turnbull will dissolve parliament and call an early election on or before 11 May.

Asian stock markets opened higher on Tuesday following positive trading sessions in the US and Europe.

In Australia, the benchmark S&P ASX 200 has traded higher by 0.76% to 5,282.60 points.

BDST: 1532 HRS, MAY 03, 2016
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