"Full pass-through would also mean that the economy receives the full benefit of today's policy decision."

Treasurer Josh Frydenberg,who spoke to the heads of each major bank ahead of the RBA meeting,said ANZ"had let down"its customers and cautioned other banks not to follow suit.

"We heard from[banking royal] commissioner Kenneth Hayne just months ago that the banks were putting profits before people,"he said."Actions like this don't give the Australian people any comfort that the banks have changed their behaviour."

Shadow treasurer Jim Chalmers said Australians would"be absolutely filthy at any bank that doesn't pass on these rate cuts".

The nation's biggest home lender,the Commonwealth Bank,will pass through all of the rate cut,but its customers will have to wait until June 25 before seeing the benefits.

"We have carefully considered the RBA rate decision and the current funding environment,together with how we continue to meet our regulatory commitments,capital requirements,and community expectations,"the bank's retail banking services group executive,Angus Sullivan,said.

It was matched by NAB,which will cut its rates by a quarter percentage point from June 14. On a $400,000 mortgage,a home buyer would save $62 a month.

Westpac was the last of the big four to move,announcing a 0.20 percentage point cut to its variable home loan rates for owner-occupiers,and a 0.35 percentage point reduction for investors with interest-only loans from June 18.

But more official rate cuts may be in the offing.

Dr Lowe said even though the economy was in"reasonable"shape,there was plenty of spare capacity in the economy,which meant the unemployment rate could fall much lower than its current level of 5.2 per cent.

"The board has not yet made a decision,but it is not unreasonable to expect a lower cash rate,"he said.

The last time the central bank changed interest rates was August 2016,a month after Malcolm Turnbull won that year's election. The cash rate then remained on hold for the longest period of interest rate stability in Australian history before falling to 1.25 per cent on Tuesday.

The cash rate is now at its lowest on record,with financial markets factoring in at least another 0.25 percentage point cut by October.

The central bankheld off on a rate cut before the election,but telegraphed its intentions less than a week later when Dr Lowe said without a cut in interest rates,unemployment across the country was unlikely to fall much further.

While Dr Lowe said the economy was in reasonable condition,the Australian Bureau of Statistics is expected on Wednesday to confirm annual growth slumping to its lowest rate since early 2013 when Mr Frydenberg hands down his third set of national accounts.

Mr Frydenberg said international tensions,flood,drought,fires and a softening housing market had weighed on the economic outlook,but the"fundamentals of the Australian economy are sound".

The ABS on Tuesday reported retail sales across the country dropped by 0.1 per cent in April with falls of 0.4 per cent in both Victoria and NSW.

UBS senior economist George Tharenou,who was one of the first analysts to tip the RBA would cut rates this year,said the bank might go further if the economy softened,inflation remained low or the trade war between China and the United States escalated.

"It remains very likely the RBA will cut another 25 basis points in August and we still see risk of more easing below 1 per cent,"he said.