Australia's central bank cut its benchmark interest rate by a quarter percentage point today.
The move came as a slowdown in China's economy and persistent weakness in Europe continue to add to uncertainty about Australia's economic outlook.
The Reserve Bank of Australia's decision to lower the rate to 3.25% was the bank's third rate cut this year.
It comes amid concerns that the slowing economy in China - Australia's biggest export market - will lead to a steep drop in demand for Australia's lucrative mineral resources such as iron ore.
"Uncertainty about near-term prospects is greater than it was some months ago," Reserve Bank Governor Glenn Stevens said in a statement. "Around Asia generally, growth is being dampened by the more moderate Chinese expansion and the weakness in Europe," he added.
Australia's economy has remained strong thanks to a mining boom largely fueled by China's demand for iron ore, coal and natural gas.
But lower commodity prices, Australia's high dollar and China's slowing growth have prompted concerns that Australia's economic glory days may be numbered.
Treasurer Wayne Swan dismissed those suggestions, telling reporters that China's economy is 40% larger than it was before the global financial crisis.
"Whilst China may be growing a little more slowly than people had anticipated, it's doing it from a very much bigger base," Swan said.
Swan said the bank's decision was a win for families and small businesses. The rate cut translates to a saving of around A$48 a month on an $300,000 mortgage.
