The RBA this afternoon slashed the official cash rate by 75 basis points to 5.25 per cent.
The reduction brings the cash rate to a five year low.
Glenn Stevens, RBA monetary policy governor, said the decision was reached in light of both international and domestic developments.
Internationally, economic data “continued to point to significant weaknesses in the major industrial economies,” he said, “and there have been further signs that China and other parts of the world are slowing as well".
Mr Stevens said that domestic spending and activity would be “weaker than earlier expected” as a result of deteriorating international conditions and falling commodity prices.
The 75 basis point cut follows a shock 100 basis point reduction last month, and 25 basis point cut in September.
International central banks are also expected to cut rates over the coming week.
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