It's the third cut of the year and means the cash rate is now where it was in April 2023.

By unanimous vote the board decided that Q2 prices showed inflation is moderating sufficiently to justify bringing rates down again.

The cut was widely expected - predicted by economists from all of the big four banks - but mortgage holders across Australia will still likely be relieved considering the shock hold in July.

Attention will now shift to home loan lenders who will be expected to pass the cut on in full to variable rates.

The 0.25% cut puts about $90-$100 a month back into the average mortgage holder's pocket ($660,000 loan over 30 years at average interest rates). 

Since February variable-rate mortgage holders are better off by about $300 a month, on average.

Less positively, savings account rates are also likely to be slashed in the coming days, with very few still offering rates north of 5.00% p.a.

Read more: Home loan rate changes after August cash rate cut

RBA still cautious?

The RBA deemed the 25 bps cut appropriate given underlying inflation continues to decline, as well as the slight increase in unemployment (4.3% in June).

However, as has become usual the statement from the monetary policy board emphasised ongoing "uncertainties" about the economic outlook.

"The Board...remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and potential supply."

Labour productivity (measured in GDP per hour worked) has yet to pick up and the Board believes despite the increase in unemployment, labour market conditions "remain a little tight".

However, the Board also noted risks in the other direction - it feels international trade policy developments could still have an "adverse effect" on global economic activity.

Economists from the big four banks, all of whom correctly predicted this cut, are in unison that there is likely to be at least one more cut before the end of the year.

"If the data evolves as expected a follow up cut should be delivered in November," Senior CommBank Economist Belinda Allen said.