RBA cuts interest rates

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SYDNEY, Sept 2 (AFP) Australia's central bank cut official interest rates Tuesday for the first time in six-and-a-half years by 0.25 of a percentage point to 7.0 per cent as the economy slows. brAt its meeting today the board decided to lower the cash rate by 25 basis points to 7.0 per cent, effective from tomorrow (Wednesday), Reserve Bank of Australia (RBA) governor Glenn Stevens said in a statement. brThe cut was widely expected after the central bank recently signalled there was room for a less restrictive policy amid rising petrol prices, a slowdown in retail spending and higher commercial borrowing costs due to the credit crunch. brIt is the first cut in interest rates since December 2001. The bank had previously raised rates to tame inflation. brPrime Minister Kevin Rudd seized on the announcement, telling parliament the government expects the banks to pass on this rate cut.