SYDNEY - Australia's central bank cut its benchmark interest rate to a record low of 2.25 per cent on Tuesday in a bid to jolt an economy weighed down by falling commodity prices.

The Reserve Bank of Australia's quarter percentage point rate cut at a monthly board meeting was its first since August 2013. It came as a surprise to many economists, who expected the bank to hold off on lowering the rate until later in the year. Subdued inflation, however, has given the central bank more scope to stimulate Australia's $1 trillion economy.

The news shook the Australian dollar which dropped 1.8 per cent 76.5 cents.