But Mr Hockey, who delivers his second budget this Tuesday, has warned superannuants they face "potentially many years" of lower returns because of lower rates.

The RBA's decision – which sets the official cash rate at an all-time low – is designed to kickstart flagging business investment but also risks reinforcing concerns about the weak state of the economy.

The rate cut was welcome news for ACT home owners like Leanne and Drew Salzke from Kambah who hoped it would allow them to upgrade to a bigger home to accommodate their growing family of three boys.

"We still paid [$315,000] for our little place and that was bottom of the market really," Mr Salzke, 36, said.

"We'd like to upgrade to a three-bedroom now with three boys ... It's almost out of our reach because we're a one-income family now.

"[The cut] will definitely help. We did the sums a couple of months back [and] to upgrade is going to hurt us."

The cut – if passed on in full – could save households on an average $300,000 25-year mortgage about $45 a month.

Core Logic RP Data senior research analyst Cameron Kusher said the RBA's decision would help increase housing affordability in Canberra, but it was about the rest of the economy, not the property market.

"The side effect of that is that it makes repaying that mortgage easier … [and] quicker and it means also that investment might become more attractive," he said.

"More recently we have seen a bit of signs of life in the Canberra housing market and certainly if you are getting that capital growth in the market there is a bit of a wealth effect [encouraging people to spend]."

First-time home buyer Sami Hetherington, 25, said the cut would make it easier considering she has entered the market alone.

"I feel great, it's obviously going to benefit me and a lot of other first home owners out there," she said.

The Australian Industry Group said the decision recognised "the fragile state of our economy", while the Housing Industry Association said it would "reignite business investment more broadly".

Mr Hockey said the cut would encourage the "green shoots" in the economy and that while rates were at a new low, Australia still had some of the highest rates in the world, meaning the RBA still had room to move if the economy softened further.

Economists believe the Reserve Bank is nearing and indeed may have reached the end of its rate-cutting phase.

NAB chief economist Ivan Colhoun says there is now little prospect of another rate cut in the near-term "barring a significant unexpected change in the global economy".

With a week until he hands down his second budget, the Treasurer said the RBA and the federal government were in lock-step about the settings needed for the economy.

"The economic objectives of the Reserve Bank are totally in sync with what the government will hand down in the budget next week ... monetary policy and fiscal policy must work together and when I deliver the budget next week you will see that everything we are doing is going according to plan," he said.

Asked about sagging business confidence, Mr Hockey said the business community should "go out and invest and create more jobs. Go out and invest and create more jobs".

Shadow treasurer Chris Bowen pointed out Mr Hockey had described interest rates higher than the new level set by the RBA as at "emergency levels" when in opposition in December 2012.

"His complete lack of consistency and competence goes to the heart of this government's challenges when it comes to the economy," he said.

Mr Bowen said the RBA's decision was a clear sign it was worried about the economy, business confidence and a lack of investment.

Mr Hockey said the government's removal of the carbon tax, which had put downward pressure on inflation, had given the RBA room to move further on rates.