SYDNEY ? Australia's central bank cut its benchmark interest rate by a quarter percentage point Tuesday in a bid to boost the nation's economy amid financial uncertainty across the globe.
The Reserve Bank of Australia's decision to lower the rate to 4.5 percent was largely expected by economists, and was the first time the bank had lowered its key interest rate since April 2009.
The bank cited a slight rise in Australia's unemployment rate ? currently at 5.2 percent ? in recent months, and subdued confidence outside the country's lucrative mining sector as factors behind its decision.
"Financial conditions have been easing somewhat recently, with market interest rates declining a little and competition to lend increasing," Reserve Bank Governor Glenn Stevens said in a statement. "But overall conditions have remained tighter than normal, with borrowing rates still a little higher than average, credit growth subdued and asset prices lower than earlier in the year.
Australia's economy weathered the global financial crisis better than most developed nations, thanks in large part to strong Chinese demand for its iron ore and other minerals.
But the bank warned that lingering jitters over Europe's sovereign debt crisis may continue to affect Australian businesses and households, despite a plan hammered out by European leaders last week.
Prime Minister Julia Gillard said the bank's decision will bring needed relief for Australian families.
"Despite our strong economic fundamentals ? and they are strong ? parts of the community are doing it very tough, are finding it very hard to make the family accounts add up, to get the bills paid," Gillard told Parliament.
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