The Reserve Bank has decided to reduce the cash rate by 25 basis points to 3.0%, effective December 5, 2012.
In their official statement, the RBA says global growth is forecast to be a little below average for some time.
"Risks to the outlook are still seen to be on the downside, largely as a result of the situation in Europe, though the uncertainty over the course of US fiscal policy is also weighing on sentiment at present. Recent data suggest that the US economy is recording moderate growth and that growth in China has stabilised. Around Asia generally, growth has been dampened by the more moderate Chinese expansion and the weakness in Europe."
Governor Glenn Stevens says that, over the past year, monetary policy has become more accommodative.
"There are signs of easier conditions starting to have some of the expected effects, though the exchange rate remains higher than might have been expected, given the observed decline in export prices and the weaker global outlook."
He says that while the full effects of earlier measures are yet to be observed, the board judged at today's meeting that a further easing in the stance of monetary policy was appropriate at this time.
"This will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time."