Australian Chamber of Commerce and Industry chief executive, James Pearson, has urged lenders to pass on the rate cut to “ensure the greatest benefit is gained” by households.

He said:

“Although we are still to see the full impact of the earlier reductions in the cash rate and personal tax cuts, we believe the timing is right to boost parts of the economy that continue to struggle.

“With slowing economic growth and lower consumer confidence, small businesses have been doing it tough over the past year. This has particularly affected discretionary spending in small retail businesses, including cafes and restaurants.”

“Weakness in the housing sector has also been a significant drag on the economy over the past year, which has flowed through to consumer confidence and household spending.”

“However, there are signs the housing sector has turned the corner recently, with a modest improvement in Sydney and Melbourne house prices. The lower interest rates will help the housing sector to rebuild momentum.”

Treasurer Josh Frydenberg has responded to the rate cut by accentuating the positive - that the RBA has pointed to “a gentle turning point in the domestic economy”.

He said the RBA had noticed the “positive benefits that have been gained by the economy from the interest rate cuts, from the tax cuts, from extra spending on infrastructure from the stabilisation of the housing market and for the uptick in mining investment”.

Frydenberg flew right past all the RBA comments on low wages growth, suggesting that the “significant challenges” the economy faces are “internationally with the global trade tensions between China and the US but they are also domestically, particularly with the punishing impact of the drought and floods”.

And of course no rate cut announcement would be complete without putting the hard word on lenders to pass it on:

It is the government’s expectation that the banks will pass on this 25 basis point rate cut in full. What this means for an Australian family with a mortgage of $400,000 is $720 less a year in interest payments. That’s a significant benefit to an Australian family. It is completely reckless for the Labor Party to be talking down the Australian economy.”

Asked why the government isn’t spending more money to stimulate the economy and how many rate cuts it will take before it will get involved, Frydenberg continued to point to existing policies including the 10-year $100bn infrastructure package.

He even claimed that “the Labor Party opposed our tax cuts which are now delivering billions of dollars into the pockets of hard-working Australians” despite Labor voting for the tax cuts in the parliament.

Asked if the government is concerned the cuts will lead to house price rises, Frydenberg responded:

We have welcomed the stabilisation in the housing market and this is important because it plays into confidence for households and household consumption is around 60% of GDP. We also know that for most Australians owning their own home is not only their dream, it is their biggest asset. They want to see its value appreciate over time, which has been the history in our country. In terms of the clearance rates, they have gone up and in terms of prices they are now starting to go up. So the interest rate cuts have contributed to a stabilisation in the housing market which we welcome.”

BIS Oxford Economics are getting ahead of the curve, looking for the next big thing. They say we shouldn’t expect a rate RISE until 2021.

Chief economist Sarah Hunter says the board highlighted “downside risks to the global economic outlook, and the persistent headwinds facing the domestic economy”. It expected jobs growth to “slow significantly over the near term as the economy absorbs the residential construction downturn and sluggish retail environment”. The bank is also projecting inflation to remain around 2% through to 2021, “which suggests there will not be a rate rise until the end of 2021 at the earliest”.

Savers, read it and weep ...

The comparison site Mozo.com says the rate cut could start a mortgage rate war after the online lenders Athena and Homestar said they would pass on the 0.25% cut to their customers in full. Such a move would put pressure on the big four banks to cut rates and give some more relief to Australia’s debt burdened households.

Here’s Mozo director Kirsty Lamont:

Online lenders are reacting to today’s RBA cut with lightning speed. They’re turning the screws on the big banks knowing the banks are in an unwinnable position, with the unenviable choice of having to either pass through today’s cut in full to mortgage customers and take a hit to their net profit margins, or hold back part of the cut and risk losing even more borrowers to their cheaper rivals.

The Greens say that the RBA has been railroaded into cutting rates because the government has refused to do its bit for the economy by increasing spending. This lack of so-called fiscal stimulus – as opposed to monetary stimulus from the RBA – has irritated senator Peter Whish-Wilson:

Without government borrowing to fund an increase in infrastructure spending, record low interest rates are re-inflating the housing market and going towards other unproductive and speculative investments. This is diluting the effectiveness of monetary policy and is railroading the RBA towards QE. Instead of being concerned about this trend, the treasurer actually seems to be cheering it along. Just last week, Josh Frydenberg was spruiking the virtue of further increases in house prices, and encouraged banks to push the limits of responsible lending barely eight months since Commissioner Hayne handed down his report.”

Here’s some reaction to the news:

This is governor Philip Lowe’s full statement after his board cut rates to yet another record low.

It’s the third cut this year and reflects the bank’s concern that growth is still too sluggish to reduce unemployment and boost inflation.

Seconds to go ...

There were also encouraging numbers today from the Australian Industry Group (AiGroup) manufacturing index, which rose from 53.1 points to 54.7 points in September.

However, another closely watched snapshot of the economy, the CBA/IHS Markit manufacturing purchasing managers’ index, fell from 50.9 points to 50.3 points. Any reading over 50 indicates expansion so the numbers tend to suggest the economy is travelling OK.

Not every Liberal in Canberra is hoping for a rate cut. My colleague Paul Karp has this:

Liberal MP Tim Wilson, the chair of the House of Representatives economics committee, has told Guardian Australia that he hopes the RBA leaves interest rates on hold to give savers a break.

My hope is that the RBA leaves interest rates alone. There’s not sufficient evidence that there’s pass through from the last two rate cuts to stimulate the economy but there is evidence it is fuelling house price rises and ultimately higher debt.

Wilson has challenged the RBA to justify the effectiveness of monetary policy prompting a lengthy response from the central bank arguing - yes - rate cuts still work.

The RBA said:

In aggregate, Australian households benefit from the effect of lower interest rates. While the income of households with deposits is lower than if rates had not been reduced, the household sector as a whole has around twice as much debt as deposits.

The ASX200 has risen ahead of today’s rates decision. The benchmark index is up 17.30 points this lunchtime to 6,705.60, a rise of 0.26%.

The Aussie dollar is under more pressure though. It’s down 0.16% to US67.4c.

Good afternoon and welcome to the live blog on the Reserve Bank’s interest rate decision. The bank’s board members are tipped by a majority of economists to cut the cash rate by 25 basis points to 0.75% this afternoon.

The chief factors driving the move are continued sluggish economic growth and the need for the RBA to meet its inflation rate of between 2-3%.

Any cut will be welcomed in Canberra where Scott Morrison and Josh Frydenberg have gamed the economy by opting for tax cuts and budget surplus rather than the large increase in government spending that some say would be better for the country than another rate cut.

However, a rate cut may not be completely cut and dried, especially after the latest monthly house price figures from CoreLogic today showed their biggest rise for more than two years. The numbers suggest that the property downturn could be over and that further rate cuts – the cash rate is already at an all-time low – could inflate another housing bubble.

On the other side of the ledger, building approvals fell again in August, indicating that the construction downturn still has some way to run.

More on those figures later but on with the blog ...