But, at this stage of the game, a total cut of between 0.5 and 1 percentage point is all we should expect.

Remember that, although the deputy governor, Ric Battellino, was right to remind us last week that the Reserve cannot wait for a fall in inflation before it starts cutting rates because it has to act pre-emptively, we've still got an inflation problem and downward pressure on inflation needs to be maintained.

In other words, while the sharpness of the slowdown in demand this year has been enough to induce the Reserve to ease the tightness of policy, it will want policy to remain reasonably tight until the evidence that the inflation rate is moving into the target zone is clearer.

Of course, implicit in this approach is the Reserve's judgment that the economy is far from falling in a heap.

Should demand continue slowing sharply, that would be a different matter.

In that case the Reserve would keep easing - confident in the judgment that inflation had receded as a problem while weak growth and rising unemployment had moved to the foreground.

You can't have both problems at the same time.

Moving to the next big question - will the banks pass on all the cut in the official rate? - Mr Battellino was also right in reminding us that what the Reserve ultimately cares about is the level of the banks' lending rates, not the level of its official rate.

That's a no-brainer.

It's the interest rates actually paid by businesses and households that affect the strength of demand.

The official rate's only role is to affect the banks' lending rates.

So, should a cut in the official rate fail to educe the desired fall in bank lending rates, the Reserve's obvious response would be to keep cutting the official rate until it did.

This reminder could be seen as letting the banks off the hook.

Feel free to keep fattening your interest margin, chaps; we'll accommodate you by making further cuts in our official rate as required.

But the banks would be unwise to see this as a green light.

The Reserve would not feel comfortable facilitating uncompetitive behaviour on the part of the banks.

The Reserve keeps a close eye on bank margins.

When the global credit crisis forced up the banks' borrowing costs, and they first began making their "unofficial" increases in mortgage rates, Mr Stevens was willing to defend them against public criticism.

He made the lesser-of-evils point that he'd rather see them raising their prices than starting to ration their lending because lending had now become unprofitable.

But the banks' most recent unofficial increase could not be justified by their higher borrowing costs.

It was a blatant attempt to take advantage of the decline in competition from the non-bank mortgage lenders and widen the banks' interest margin.

So the Reserve will be offering no support for the banks this time - as was clear from the observation last week of an assistant governor, Philip Lowe, that there was "no obvious reason" for the banks not to pass on any cut in the official rate.

Indeed, not.

In fact, since the Reserve's intention to begin cutting the official rate became clear, the cost of the banks' most important source of wholesale funding, the 90-day bill rate, has fallen by more than 50 basis points.

So, should the banks fail to pass the rates cuts through in full, they can expect no sympathy from anyone.

They'll be roundly condemned by both sides of politics, the media and every talk-back jock in the business.

Will they fail to flow on in full?

They and their chief executives are certainly greedy enough and heedless of their customers' interests, but I doubt they're that stupid.

• Ross Gittins is the Sydney Morning Herald's Economics Editor.