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Reserve Bank of Australia cuts interest rate to record low

Australia's central bank had reduced its benchmark interest rate to a record low as the country attempts to counter the slowing growth in its mining sector.

The Reserve Bank of Australia (RBA) has cut its key rate of interest from three per cent to 2.75 per cent.

According to the bank, investment in the resources sector will peak this year.

It is hoped the rate cut will help all areas of the economy and create long-term sustainable growth.

The RBA said: "There has been a strengthening in consumption and a modest firming in dwelling investment, and prospects are for some increase in business investment outside the resources sector over the next year."

Australia's economic growth in recent years has been generated by the growing demand for its commodities, with iron ore being one of the biggest. However, as demand from key markets such as China has lowered, it is likely Australia's mining sector will see its growth slow down.

By Asim Shah