Australia’s central bank has reduced its benchmark interest rate by a quarter percentage point for a third time this year to 3.6%, with inflation tamed and economic growth stalling.

The Reserve Bank of Australia delivered its third interest rate cut since the start of the year, responding to evidence that inflation has cooled and new forecasts showing that it is likely to remain contained.

The central bank warned the economy was incapable of growing faster than 2 per cent per year in a reality check before Treasurer Jim Chalmers’ roundtable.