ANDREW CARSWELL: Anthony Albanese would be mistaken to treat any interest rate cut as a political lifeline

It might sound a little strange, given the tremendous stress that remains on households.

But the Albanese Government would be mistaken to treat any interest rate cut this month as a political lifeline.

While the outcome remains a coin toss, the Government is desperately banking on a favourable decision from the Reserve Bank when it meets next week, to both bookend a horror run of economic setbacks and missteps, and begin the process of building momentum into an election campaign.

It is the February 18 showdown. We can be sure it’s marked and circled in every ministerial calendar; such is the importance of a rate cut in the minds of worried Labor MPs and the party faithful. They will be glued to screens at 2.30pm on this fateful day, pressing refresh with the speed of a pimply-faced gamer, hoping for deliverance. Praying for grace. A skerrick of good news to placate the angry mob waiting at the gates.

This is a trap for the Albanese Government.

Because such is the desperation for an antidote to cost-of-living ails, overreach is an imminent threat. The Government’s likely inability to contain its relief and quell its joy will inevitably morph into triumphalism; a display of collective back patting at a job well done.

Do this if you wish to stoke the fires of discontent, not quell them.

Already, there is a stark disconnect emerging between the Government’s increasingly upbeat messaging on the economy and the brutal realities facing households on a daily basis.

Of course, this enthusiasm is entirely understandable. Albanese and co preached a bold message to the public that they would tame the beast of high inflation and get interest rates moving in the right direction. And they did, assuming the RBA decides to ignore the economic dislocation and uncertainty caused by Trump’s tariff war, and clips interest rates on February 18. Underlying inflation, the RBA’s preferred inflation gauge, fell to 3.2 per cent in December, a mere bee’s member from that magical 2-3 per cent band that makes monetary policy wonks sleep at night.

But moderating inflation has not dulled the pain. Cost of living is still squeezing the air out of the lungs of ordinary Australians. High mortgage costs continue to grind middle Australia into the dirt, limiting their options and opportunities.

For most, including the one-third of Australians who rent, the deliverance of a rate cut will just be another Tuesday, with its impact barely registering against the tide of cost-of-living pressures. A drop in the ocean.

But yet the Government remains jubilant with the trajectory. Maybe they do have reason to cheer, but we are not ready to join them yet. We are still sulking. Still moody.

Treasurer Jim Chalmers has a job on his hand to constrain his colleagues and moderate their enthusiasm. They are excitable sheep. They want to scream success from the rooftops. His PM desperately wants some wins to spin.

But it is also incumbent on the Treasurer to ensure his own language doesn’t deviate from relative conservatism, and move into brand protection and legacy building.

No doubt, it is a fine balancing act. How do you celebrate an economic achievement, without blowing your own trumpet?

According to the gospel of Jim, we are making “sustained and substantial progress” and that “the pressures are easing”. But to balance the ledger, “Australians are still under the pump” and “people are still doing it tough”. He is still, but only just, managing to disguise his trademark smirk. You see, every now and again, playing a determined battle with his face. He’s desperate to set it loose.

This tenuous balance is holding for now. Only just. This must be maintained in the coming weeks in the face of a rising ride of optimism when/if the glory of a potential interest rate cut lands.

In putting all your eggs in one basket, there is also the danger of disappointment.

All the upside of the interest rate decision is already baked in. It’s expected, despite our clear ignorance of the finer details of the RBA board’s task at hand.

Because the Government has telegraphed the increasing likelihood of a rate cut so hard and so deliberately that it is now accepted fact. Commentators have been broadcasting the chance for months, increasing their optimism when the December inflation figures showed progress.

The risk that the RBA keeps rates on hold now carries more heat than usual.

It would be enough to crush Labor’s spirits and stocks, such is the importance they themselves have placed in the decision.

If only Labor had exercised fiscal discipline from the start and kept a tight rein on government spending. Instead, the sheer scale of taxpayer money flooding out the door in the last three years, has kept inflation higher for longer, making the cost-of-living crisis even worse.

The Government wouldn’t be sitting and waiting for that cut.

We would’ve already had one.

Andrew Carswell is a former adviser to the Morrison government