The Premier, Lara Giddings, has welcomed today's decision by the Reserve Bank Board to cut official interest rates by 25 basis points to 3.25%.

Ms Giddings said that interest rate relief was needed to offset the impact of the high Australian dollar and weaker commodity prices.

"Both the retail and housing sectors remain soft across the nation, with household savings rates at generational highs.

"Previous rate cuts have not had the desired impact of boosting consumer confidence or putting downward pressure of the very high Australian dollar.

"Further action on interest rates was desperately needed and this decision means more money in consumer's pockets, which will give confidence to our retail sector and its 26,000 strong Tasmanian workforce," Ms Giddings said.

Ms Giddings said if a 25 percentage point cut was passed on in full by the banks, it would equate to around a $35 per month reduction in average home loan repayments in Tasmania.

"We now need the banks to play their part and pass on the rate cut for it to provide a necessary confidence boost.

"Given the RBA's comments about the weakening global economy and low inflation there is also scope for further rate cuts in coming months," Ms Giddings said.