The Reserve Bank of Australia has cut its cash rate to 1.5 per cent, a fall of 25 basis points.

In a statement, governor Glenn Stevens cited low inflation rates as the reasoning behind the fall, saying "given very subdued growth in labour costs and very low-cost pressures elsewhere in the world, this is expected to remain the case for some time."

He also argued that the risks of a cut to interest rates exacerbating the housing market had eased.

The New Zealand dollar rose to 95.65 Australian cents from 95.14 cents immediately before the statement, before settling at 95.54 cents in response to the announcement.

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New Zealand's Reserve Bank is scheduled to set rates next Thursday and has been widely tipped to cut by 25 points to a record low of two per cent.