Australia's central bank has cut its benchmark interest rate by a quarter of a percentage point to a new record low of 1.25% in the first rate change in almost three years.

The change Tuesday was widely expected after Reserve Bank of Australia Governor Philip Lowe said two weeks ago that inflation was likely to remain below the bank's target range of 2% to 3% a year and that a decrease in the cash rate would likely be appropriate.

The bank moves interest rates to keep inflation within the target range. Inflation is currently running at 1.3%.

The cash rate last moved in August 2016 when it was reduced by 0.25% to 1.5%.

The rate has not been increased since November 2010 when it rose 0.25% to 4.75%.