(RTTNews) - The Reserve Bank of Australia trimmed its key interest rate by 25 basis points on Tuesday, the bank said, from 7.25 percent to 7.00 percent.

That marks the first rate cut in almost seven years after 12 straight rate increases since December 2001 that took the cash rate to 7.25 percent.

The RBA said in a statement that capacity utilization indicators are declining, and that financial conditions are quite tight. The bank will continue to assess inflation and demand prospects.

The reduction also came despite indications that inflation in Australia was a growing concern. The most recent data put the nation’s interest rate at a 17-year high of 4.5 percent, well above the RBA’s target range of 2 to 3 percent.

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