The central bank took the cash rate below 1 per cent for the first time in Australian history on Tuesday, as rising unemployment, stubbornly low wages growth and a $US300 billion US-China trade war shackle business confidence and turn customers away from shops.

The RBA will consider implementing unconventional monetary policy measures - quantitative easing - including printing money to buy government bonds if interest rates hit 0.5 per cent. The market has forecast a 100 per cent probability of that point being hit by February.

Treasurer Josh Frydenberg and shadow treasurer Jim Chalmers urged the big four banks to pass on Tuesday's 0.25 percentage point cut in full even as lower rates squeeze the banks' net interest margins.

"It is the government's expectation that the banks will pass on this 25 basis point rate cut in full," Mr Frydenberg said in a press conference. "What this means for an Australian family with a mortgage of $400,000 is $720 less a year in interest payments."

Mr Frydenberg said the government was "focused on creating more jobs" and "ensuring the economy continues to grow". He did not outline any further stimulus plans beyond a letter written to the states asking them to explore bringing forward infrastructure spending.

Dr Chalmers said Tuesday's rate cut to 0.75 per cent highlighted "the urgent need" for the government to stimulate the economy.

"After three rate cuts since the May election, record low interest rates are now one quarter of what they were during the depths of the global financial crisis," he said. "The government is leaving all of the heavy lifting to the Reserve Bank."

Reserve Bank governor Philip said in his statement further cuts were an option.

"The board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time," he said.

The Australian dollar barely moved after the decision, holding around US67c.

Asia-Pacific economist for global job search website Indeed, Callam Pickering, said it was unclear whether the latest cut would boost the economy enough to bring down the jobless rate. He said it was time for governments to look at delivering their own financial assistance to the economy.

"Quite simply, the economy requires more stimulus. Ideally, the federal government would rise to the occasion," he said. "Fiscal policy can be better targeted in the current environment and could stimulate the economy without pushing house prices and debt higher. Unfortunately, a budget surplus has been placed ahead of jobs and growth. The RBA will have to make do with their imperfect policy tool."

Canberra, Sydney and Melbourne's property markets are likely to continue to ride the cheaper credit, as prices start to return to their pre-downturn heights. According to CoreLogic figures released on Tuesday, house values in Sydney and Melbourne jumped 1.9 per cent and in Canberra by 1 per cent in September.

The researchers put the price of a typical property - the one in the middle of the range - at $604,039, a peak certainly for recent years.

Tim Lawless, head of research at CoreLogic, said recent evidence of a strong rebound in Sydney and Melbourne housing values wasn't enough to stave off a rate cut.

"A trend towards higher unemployment and a slowdown in jobs growth were likely the primary factors in the RBA's decision to cut rates to a new low, as well as concerns around persistently weak household spending, subdued wages growth and low inflation," he said.

"The rebound in housing conditions should help to support an improvement in economic conditions as higher housing prices translate to a wealthier and more confident household sector who will hopefully be inclined to spend more."

While home prices rise, figures from the Australian Bureau of Statistics on Tuesday show total building approvals fell 1.1 per cent in August and now sit 21.5 per cent lower than a year ago.

Commonwealth Bank economist Belinda Allen said the slowdown had resulted in construction jobs being shed over the past year.

"[But] rising transport infrastructure spending and other non-transport projects are helping to offset these jobs losses," she said.