Australia's central bank lowered its key interest rate for the first time in three months.

The board of the Reserve Bank of Australia governed by Glenn Stevens on Tuesday reduced the cash rate to 1.50 percent from 1.75 percent. The outcome of the meeting came in line with expectations.

The bank last slashed its rate by 25 basis points in May, which was the first reduction in a year.

The Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting.

Low interest rates supported domestic demand and the lower exchange rate since 2013 helped the traded sector. Although these factors assisted the economy to make the necessary economic adjustments, an appreciating exchange rate could complicate this, the bank noted.

Policymakers said the likelihood of lower interest rates exacerbating risks in the housing market has diminished.