The four major banks have passed on the full 0.25 per cent rates cut to mortgage holders, saving home owners about $56 a month on a $400,000 loan.
The Reserve Bank slashed the official interest rate to a new low of 0.50 per cent on Tuesday, as the economy reels in the face of the coronavirus.
Prime Minister Scott Morrison confirmed a stimulus package is imminent. He has not released details but said was especially concerned about cash flow for small businesses and said the package would focus on jobs, cash flow and investment.
The last rate cut was five months ago, in October, when the rate was cut to a historic low of 0.75 per cent.
The Reserve Bank board said it was keeping a close eye on the coronavirus impact and was prepared to reduce rates further if necessary.
The outbreak was having a significant impact on the Australian economy, especially in education and travel, and was likely to affect domestic spending. Growth would be noticeably weaker this quarter.
"Given the evolving situation, it is difficult to predict how large and long-lasting the effect will be," the board said in a statement.
The Australian dollar was at its lowest level for many years and financial markets were volatile. Unemployment increased in January to 5.3 per cent, and wages growth was not expected to pick up for some time.
The bank renewed its push for an increase in wages, which it said was necessary for inflation to stay in the 2-3 per cent target range.
"The global outbreak of the coronavirus is expected to delay progress in Australia towards full employment and the inflation target," the bank said. "The board therefore judged that it was appropriate to ease monetary policy further to provide additional support to employment and economic activity."
This morning, Prime Minister Scott Morrison called on the big banks to pass on any rate cut today in full, saying they should now "do their bit".
"Honestly, I don't see it any different to what Qantas did when we called out to Qantas and we said, 'we need your help, we need to get some people out of China, we need to get some people out of Japan'. And Qantas showed up - frankly as they always do. This is the same call-out, on behalf of all Australians."
Mr Morrison is yet to release details of a government stimulus package, saying details were still being worked out. Describing it as a "boost", he said the package would focus on jobs, cash flow and investment. The government was especially concerned about cash flow for small businesses.
It would be "necessary, targeted, scaled" and avoid making the mistakes of previous stimulus measures, he said, suggesting any stimulus would need to be able to "move more readily" than infrastructure projects, which are slow to roll out.
Chief Medical Officer Brendan Murphy contradicted a call from NSW Health Minister Brad Hazzard for Australians to stop shaking hands. Professor Murphy said people should practice "social distancing" from people who had recently returned from affected countries overseas but did not need to avoid hand-shaking more generally.