Current global and domestic economic conditions call for a slide on Australia's interest rate, according to the latest business sentiment indicator published on Wednesday by the Australian Chamber of Commerce and Industry (ACCI).

From its present level of 4.75 percent, the ACCI believes that economists consensus of reverting to 4.0 percent makes sense as domestic inflation appears to be under control at this time.

Despite attempts by European leaders to contain the crippling effects of the debt crises that have been hammering the Eurozone and assurances from Federal Treasurer Wayne Swan that Australia will weather the international economic storm, business confidence suffered a dip in the September quarter.

The index of business expectations, according to ACCI director Greg Evans, retreated from 49.1 points in the past three months to 48.3 points in the third quarter, a level that Evans said points to likely economic contraction, which he added is the first gloomy reading for the survey over the past 13 years.

The ACCI blames the unsettling global economic situation, the soaring Australian dollar and the impeding new federal taxes as the conspiring factors that chip away business operations' confidence.

Evans stressed that during these times, the Reserve Bank of Australia (RBA) needs to reassess the overall situation and act decisively for a possible drawdown of the cash rate, if not in October then at least by the end of the year.

"We certainly believe the Reserve Bank has a greater capacity to deliver a rate cut ... inflationary pressures are receding and we are seeing that softness in the labour market ... and certainly, business would welcome some relief in terms of interest rates," the ACCI director was quoted by the Australian Associated Press (AAP) as saying.

The group stressed that mere assurances coming from both Swan and Prime Minister Julia Gillard will not allay the fears that presently characterise the general business sentiments in Australia.

Ms Gillard had earlier declared that while the rest of the international economies are struggling to address their financial and debt issues, Australia remains entrenched on solid grounds owing to the policies that deflected much of the impacts of the global financial crisis in 2009.

On his part, Swan observed that the European is indeed problematic but the region is tackling its problems head-on and "I'm slightly more optimistic the Europeans will make some progress."