From www.rossgittins.com: The Reserve Bank of Australia’s recent decision to cut interest rates by 0.25 points reveals uncertainty about the economy and its future direction, as it grapples with a surprising return to near full employment.

While the underlying inflation rate is easing, the central bank’s cautious stance is influenced by concerns that a tight labor market could lead to rising wages and renewed inflation.

This situation illustrates the tension between monetary policy independence and political pressures, as the Reserve navigates its obligations.