The Reserve Bank of Australia has slashed the official interest rate to a new historic low today of 1.75 per cent, with at least one major bank to pass on the cut in full.

According to MoneyQuest, the rate cut will save homeowners $72 a month on a $500,000 loan, bringing the average standard variable home loan rate down to 4.52 per cent.

It appears the Reserve Bank has reacted to concerns around the relative strength of the Australian Dollar and the impact this is having on exporters and tourism and new data showing inflation has dropped below their target range of 2.5 – 3%.