Retirees have nation's health at heart: PM

Tony Abbott believes self-funded retirees are more concerned about the health of the nation than the potential impact of an interest rate cut on their income.

The prime minister concedes the Reserve Bank's cut in its cash rate to a record low 2.25 per cent is not good news for everyone.

But it will help build confidence, along with lower petrol and power prices.

"The great thing about older Australians is that they have our nation's interests at heart," Mr Abbott told Macquarie Radio on Wednesday.

"I think whatever the impact might be on their personal finances, they want to see our country well managed, they want to see the economy strong."

The Commonwealth Bank was the first of the big four banks to cut its standard variable mortgage rate on Wednesday, matching the RBA's 25 basis-point reduction.

Westpac quickly followed but went further than the CBA, with a 28 basis-point move.

Treasurer Joe Hockey, who expects the cash rate will be cut even further in the months ahead, said all banks must pass on the latest reduction in full to homeowners, small business and credit card holders.

"The flow-through to the Australian economy is significant," he said.

In cutting the cash rate for the first time in 18 months, the RBA cited the prospect of below-trend economic growth for longer than expected, and a higher peak in the unemployment rate.

It will give a fuller explanation in its quarterly monetary policy statement on Friday.

New figures on Wednesday backed the central bank's decision.

The National Australia Bank's quarterly business survey was consistent with a "patchwork economy", with confidence slipping below its long-run average.

The Australian Industry Group's performance of services index showed industry had stabilised after a largely negative 2014 and was on the cusp of expanding in 2015.

Group chief Innes Willox said the result was encouraging, but service sector business remained concerned about weak local economic conditions and subdued confidence.

"(The) decision by the Reserve Bank to lower interest rates provides a timely boost to the outlook," Mr Willox said.