Australia's Reserve Bank has cut the country's interest rates by 25 basis points -- a record low.

The Official Cash Rate has been slashed from two per cent down to 1.75 per cent.

Ben Forrester from Macquarie Private Wealth said some experts suspected this would happen.

"This cut clearly was in response to that very low CPI print that we got last week."

Mortgage choice spokeswoman Jessica Darnbrough said lower than expected inflation figures played a big part in today's decision.

"We can attribute this to a deflation result as well as falling consumer sentiment but definitely, with now the federal Budget just hours away, it was a surprising decision."

The cut comes ahead of Australia's budget tonight - where a "Google Tax" is expected to be announced, to bring big multinationals into a fair tax bracket.