The RBA was cautious when it came to cutting interest rates last year. The board repeatedly told borrowers it didn't want to be hasty and would wait for more data before bringing rates down.
Today's decision is, predominantly, a reaction to one month of inflation data. The annual inflation rate increased to 3.8 percent in December, above the Reserve Bank's target band of 2-3 percent. But that was almost entirely driven by one-off spending on travel and accommodation.
The underlying or "core" inflation – which strips out all the big jumps and falls - was 0.23 percent in December, the lowest in six months.
"By its own cautious standards, the RBA should have waited at least another month before inflicting more pain on borrowers," said Matt Grudnoff, Senior Economist at The Australia Institute.
"The December CPI numbers were driven almost entirely by the increase in prices for travel and accommodation.
"Today's decision will cost jobs. The RBA wants unemployment to go up. It believes low unemployment makes it hard for businesses to hire workers, forcing them to increase wages to attract them, and those higher wages will lead to higher prices.
"But unemployment has been below the RBA's sustainable rate of 4.5 percent for four years and wages have not shot up. Forcing unemployment up will just create pointless misery."
