* RBA cuts cash rate 25 bps to record low of 1.5 pct
* A$ slips half a cent, 10-year bond yields at historic low
* Market implies chance of further move, RBA offers no guidance
By Wayne Cole
SYDNEY, Aug 2 (Reuters) - Australia's central bank cut its cash rate a quarter point to an all-time low of 1.5 percent on Tuesday, the second easing this year as it seeks to defend the economy from creeping deflation and restrain a currency that's too strong.
The local dollar AUD=D4 fell almost half a U.S. cent after the Reserve Bank of Australia (RBA) announced the move following its August policy meeting. Government bonds rallied, with yields on 10-year debt at historic lows of 1.82 percent AU10YT=RR .
"The Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting," said RBA Governor Glenn Stevens, who retires next month after a decade at the helm of the central bank.
Investors wagered heavily on an easing, with interbank futures implying a 70 percent probability of a cut 0#YIB: earlier on Tuesday. A Reuters poll of 49 economists had found 38 expected a rate cut this week. AU/INT
Pressure for more stimulus had grown after consumer price inflation slowed to 17-year lows in the June quarter while underlying inflation hit an all-time trough of 1.5 percent.
That was well short of the RBA's long-term target band of 2 to 3 percent, suggesting the economy needs to grow faster to prevent too-low inflation from becoming the new norm.