SYDNEY - The Reserve Bank of Australia (RBA) has cut its benchmark interest rate to a new historic low of 2.25 per cent, the first cut since August 2013.

The RBA cut the cash rate by a quarter of one percentage point from 2.5 per cent.

The fast-falling Australian dollar almost immediately lost more than one US cent to fall below 77 cents to the greenback.

Analysts had been split over whether the RBA would further cut rates with some believing the RBA would hold off till next month.

Australia's resources-driven economy has been hit hard by falling commodity prices and China's slowing economy.

The RBA's move follows similar monetary easing steps taken by many central banks around the globe in recent months.

The Reserve Bank of India is due to make a decision on a possible interest rate cut there later on Tuesday.