If passed on in full by commercial banks, a person with a $300,000 mortgage would save about $23 a month.

In addition, the bank said it would cut to 0.1 per cent the interest rate it is charging the nation's banks on a $200 billion line of credit that has been put in place to offer cheap money to small and medium-sized businesses.

The interest rate it pays banks that leave money overnight with the RBA has been taken to zero.

Longer term, the RBA will expand its bond-buying program to purchase $100 billion over the next six months, revealing it would start targeting the interest rate on five and 10-year government bonds.

It will split the purchases, with 80 per cent to be of federal government bonds and 20 per cent from state government bonds. The bonds will be bought on the secondary market and not directly from governments.

This is in addition to the more than $60 billion the bank has spent since March on buying three-year government bonds.

Quantitative easing covers a series of measures undertaken by central banks to boost an economy that extend beyond cutting official interest rates. They include long-term guidance on interest rate settings and the purchase of government bonds, both measures undertaken by the RBA.

"With Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can to support the creation of jobs," RBA governor Philip Lowe said in a statement on Tuesday.

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