The Reserve Bank of Australia (RBA) has jumped on the easing bandwagon, cutting rates on Tuesday for the first time since August 2013, as the central bank moved to prop up an economy hit by falling commodity prices.
The RBA slashed rates by 25 basis points to a new record low of 2.25 percent. The rate decision was a close call with debt markets implying a 60 percent chance of a quarter-point cut, while a poll of economists by Reuters indicated a no move majority.
The news sent the Australian dollar skidding to a six-year low of $0.7650 and plunging more than two percent against the Japanese currency at 89.72 yen. The benchmark S&P ASX 200 index, meanwhile, soared to 7-year highs, adding 1.2 percent to an intra-day peak of 5,692.7 points.