RBA chief hints at even lower rates The central bank could deliver more interest rate cuts, after making a surprise reduction to head off the negative impact of a high Australian dollar. The Reserve Bank of Australia (RBA) lowered the cash interest rate by 25 basis points to 2.75 per cent on Tuesday, to the lowest level in its rate setting history. Central bank governor Glenn Stevens said the board agreed it needed to encourage growth in the economy and hinted it had the firepower to deliver further stimulus. "The board has previously noted that the inflation outlook would afford scope to ease further, should that be necessary to support demand," he said. Treasurer Wayne Swan welcomed the decision of a number of retail banks, including National Australia Bank and Commonwealth Bank of Australia, to pass the RBA's interest rate cut in full to customers. "There will continue to be big savings flowing through to families and of course small business," he said. The high exchange rate was putting pressure on all sectors of the economy, particularly business profitability and government revenue, Mr Swan said. The cash rate is now below its three per cent low of the 2008-2009 global financial crisis and is at a level Mr Swan had previously described as an "emergency rate." But he said it was "grossly inaccurate" to say the new level meant the economy was in bad shape. "The picture (the RBA) is painting of this economy is in no way similar to the picture of the economy that existed at the height of the global financial crisis," Mr Swan said. Shadow treasurer Joe Hockey said the RBA was showing the economic leadership the government had failed to deliver. "We now have a budget in chaos, we have got a government in chaos, but we have got a Reserve Bank that is prepared to step up to the mark and try to provide some economic leadership," he told reporters in Sydney. Mr Hockey said the economy wasn't doing fine. "If that's the case, the Reserve Bank wouldn't be cutting interest rates today," he said. Business groups welcomed the rates decision, with the Australian Industry Group saying it was timely given softer domestic conditions. "Alone this will not act as a silver bullet to boost demand but it is a welcome step to stimulate economic activity," Ai Group chief Innes Willox said. The rate decision came as data showed the construction sector shrank for the 35th consecutive month in April, while house prices in capital cities rose just 0.1 per cent in the first three months of the year. However, Australian Bureau of Statistics data also saw Australia post its first monthly trade surplus since late 2011. The trade balance of goods and services in March was a seasonally adjusted $307 million surplus after a $111 million deficit in February. "Unlike much of the world, Australia's economy is resilient," Trade Minister Craig Emerson said.