The decision by the Reserve Bank to cut rates on Tuesday was welcome and well overdue. While all signs point to more rates cuts to come, unfortunately the RBA remains wedded to the idea that we need more people to lose their jobs in order to keep inflation low.

You might have missed it, but the inflation fight is now officially over.

After every board meeting going back to October 2022, the RBA has issued a statement that ended by saying the bank remains “resolute in its determination to return inflation to target”.

On Tuesday the bank changed the language, ending its statement by noting that “the Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome”.

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It is no longer resolute about returning inflation to target, because inflation now is within the 2% to 3% target range.

Suddenly the RBA has rediscovered that it is supposed to also care about full employment. That might seem good for those looking for work, but unfortunately, the bank view of full employment is that we need more people unemployed.

For you........

© The Guardian