By Daniel Hunter

The Reserve Bank of Australia (RBA) has cut interest rates to the record low of 2.25%.

It is the first cut to interest rates in 18 months. Australia's financial markets reacted well to the news - S&P/ASX 200 was up 1.3% to hit a seven year high.

The move by the RBA follows similar ones made in the region, with China, Canada, Singapore,FIFA Crédits Korea and India central banks cutting interest rates.

"The available information suggests that growth is continuing at a below-trend pace, with domestic demand growth overall quite weak. As a result, the unemployment rate has gradually moved higher over the past year," RBA Governor Glenn Stevens said in a statement.

Figures suggest that the Australian economy is in a slowdown, with mining investment falling.

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