The Reserve Bank has cut the interest rate to a record-low of 0.25 per cent in an historic suite of measures to offset a likely loss of jobs and income during the COVID-19 pandemic.
Thursday's widely anticipated emergency rate cut means the central bank has also pulled the trigger on its first-ever quantitative easing program to boost cash supply and encourage lending and investment.
It was the RBA's first unscheduled rates decision since 1997.
RBA Governor Philip Lowe says the major focus was to support jobs, incomes and businesses as travel restrictions tighten and social quarantine measures escalate.
"The Reserve Bank Board did not take these decisions lightly," Dr Lowe said of the support measures.
"But in the context of extraordinary times and consistent with our broad mandate to promote the economic welfare of the people of Australia, we are seeking to play our full role in building that bridge to the time when the recovery takes place."
A key plank of the RBA's support package is the creation of a $90 billion lending facility to banks for small and medium businesses, adding to a $15 billion loan scheme for small and medium lenders also announced by federal government on Thursday.
Dr Lowe could not offer an updated economic forecast, only saying the RBA was expecting a major hit to economic activity and incomes that will last "a number of months", as well as significant job losses.
The word 'recession' did not appear once in either the 1430 AEDT rates announcement or Dr Lowe's later speech to media.
But he also stressed that the pain will be temporary.
"As we deal with it as best we can, we also need to look to the other side when things will recover," Dr Lowe said.
"When we do get to that other side, all those fundamentals that have made Australia such a successful and prosperous country will still be there. We need to remember that."
The RBA had already reduced the cash rate to 0.5 per cent at its regular board meeting this month to buttress the nation amid rising fears of a coronavirus-induced recession.
The board agreed yesterday to the fresh round of support measures as quarantine and social isolation measures intensify and large parts of the nation grind to a halt.
Thursday's announcement is in addition to government's $17.6 billion stimulus package it announced last week.
Fidelity International's cross-asset specialist Anthony Doyle said Thursday's rate cut and the commencement of a QE program was a historic day for the nation.
"For the first time in its 75-year history of being responsible for monetary policy ... the RBA can no longer meet its objectives using traditional monetary policy," Mr Doyle said in a note.
Commonwealth Bank was the first of the big four lenders out the door on Thursday and will cut its fixed-rate home loan, but will not be changing its standard variable rate.
Prudential regulator APRA, meanwhile, announced it will temporarily lower its expectations regarding bank capital ratios to ensure banks are well positioned to continue to provide credit to the economy in a coronavirus-affected environment.
"Given the prevailing circumstances, (APRA) envisages (the banks) may need to utilise some of their current large buffers to facilitate ongoing lending to the economy," the regulator said.
The RBA is planning to flood the market with cash by starting a program of bond buying from the banks to free up money to be lent, and reduce some costs for banks.
Dr Lowe also indicated the bank will also continue to provide liquidity to Australian financial markets by conducting one-month and three-month repo operations in its daily market operations until further notice.
Other central banks, governments and regulators across the globe have stepped up to cushion the economic impact of the coronavirus.
The European Central Bank launched a 750 billion euro ($A1.4 trillion) bond purchase overnight, while the White House has proposed a $US1 trillion ($A1.7 trillion) stimulus package to help prop up its economy.
BIS Oxford chief economist Dr Sarah Hunter said it was clear the RBA did not intend to remove its support until the recovery in the economy was firmly established.
"Although the outlook is still very uncertain, it is likely that QE will be used throughout this year and potentially into 2021," Dr Hunter said.
The Aussie dollar bounced on Thursday's 1430 announcement, jumping from a near 18-year low of 55.41 US cents to 56.33 US cents by 1440 AEDT.
The currency was worth 56.37 US cents by 1705 AEDT.
Australian Associated Press