Australia's central bank is cautious about cutting rates further given cost pressures in a hot labour market, but it will respond if inflation slows more quickly than expected, senior officials said on Friday.

The Reserve Bank of Australia on Tuesday cut benchmark interest rates for the first time in over four years, joining ranks with other major global central banks, as softening inflation allows room for easing policy.

The RBA cut its cash rate by 25 bps to 4.10%, initiating a new easing cycle amid easing inflation. Click here to read what this means for Australian equities.