Federal Treasurer Joe Hockey has welcomed the Reserve Bank's decision to cut interest rates, saying it is good news for families, businesses and jobs.

The RBA has cut rates for the first time since August 2013, reducing the official cost of borrowing by 25 basis points.

The move takes the cash rate down to 2.25 per cent, a record low since the Reserve Bank gained independence and started targeting inflation in the 1990s.

Mr Hockey said he had no doubt that the move would help to lift both business and consumer confidence.

"This is good news for Australian families and it's good news for Australian business," he said.

"It's good news for jobs and it's good news for households.

"This will put an extra $750 a year into the pockets of a typical Australian family with a mortgage of $300,000."

Mr Hockey said while the decision was solely a matter for the RBA, the Government had been working hard to take the pressure off interest rates by keeping inflation low.

"The Government will continue to repair the Labor mess and get the budget back on track so that the RBA has the capacity to move on interest rates in the future should it need to," he said.

The Treasurer has put pressure on the banks to pass on the interest rate cut and congratulated the Bank of Queensland for already doing so.

"I also expect this to be passed through particularly for small business owners and to be passed through for everyone who has a credit card," he said.

"We expect this to cut through right across the spectrum of credit."

Chris Bowen seizes on Hockey's apparent change in position

When interest rates last fell in August 2013, Mr Hockey had a very different response, saying it was a sign of Labor's mismanagement of the economy.

"If interest rates come down today, it is because the economy is struggling, not because it's doing well," he said at the time.

Speaking to reporters in Canberra today, Mr Hockey said the circumstances were different.

"Nothing illustrates that better than the statement from the RBA where they said 'the inflation recorded is the lowest increase for several years, this was affected by the sharp decline in oil prices at the end of the year and the removal of the price on carbon'," he said.

"So getting rid of the carbon tax reduces costs in the economy, it lowers inflation and it means the RBA can move to lower interest rates."

Shadow treasurer Chris Bowen welcomed today's interest rate cut, but noted Mr Hockey's apparent change in position.

"Joe Hockey and Tony Abbott both used to say that falling interest rates were a sign of a weak economy and a bad government," he said.

"Instead of engaging in hypocrisy and spin, the Government just needs to start producing a proper economic plan with economic growth and jobs at its core.

"Making it harder for low and middle-income families to make ends meet while gutting science, research and development funding is no economic plan, it does nothing other than undermine future sources of economic growth."