Changing the decimal working precision to 2 digits is not a good idea, unless you absolutely only are going to perform a single operation.
You should always perform calculations at higher precision than the level of significance, and only round the final result. If you perform a long sequence of calculations and round to the number of significant digits at each step, errors will accumulate. The decimal module doesn't know whether any particular operation is one in a long sequence, or the final result, so it assumes that it shouldn't round more than necessary. Ideally it would use infinite precision, but that is too expensive so the Python developers settled for 28 digits.
Once you've arrived at the final result, what you probably want is quantize:
>>> (Decimal('1.00') / Decimal('3.00')).quantize(Decimal("0.001"))
Decimal("0.333")
You have to keep track of significance manually. If you want automatic significance tracking, you should use interval arithmetic. There are some libraries available for Python, including pyinterval and mpmath (which supports arbitrary precision). It is also straightforward to implement interval arithmetic with the decimal library, since it supports directed rounding.
You may also want to read the Decimal Arithmetic FAQ: Is the decimal arithmetic ‘significance’ arithmetic?
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