Sebastian thinks it's likely the bank will cut rates again when it next meets in February, though he predicts the rate will not be lowered below 2.75 percent.
The bank's decision also follows the release of weaker-than-expected retail spending figures just weeks before Christmas. The Australian Bureau of Statistics on Monday reported retail spending remained flat in October, surprising economists who had predicted a rise of 0.4 percent.
Treasurer Wayne Swan was quick to counter concerns about the nation's financial health, saying Australia remained in great shape.
"Anybody who thinks that rates are at the same levels now for the same reason they were at lows during the global financial crisis simply can't be taken seriously when it comes to economic policy," he told reporters in Canberra, noting that the Australian dollar was at around 60 U.S. cents during the downturn. It now fetches around $1.04.