When the RBA moves to lower the cash rate it will cause other short-term interest rates in the economy to fall. This stimulates borrowing and spending within the economy. As a result, business output will typically increase, and this results in increased economic activity and employment. When the uptick in economic activity is strong enough it can also cause an increase in inflation. The opposite is also true. When the cash rate is increased it acts to curtail economic activity, hopefully leading to lower inflation. An unwanted side effect is often lowered employment.