Prime Minister Anthony Albanese plays down link between interest rates cut and election fortunes

The Government has tempered expectations of a February interest rate cut, playing down any link to the Reserve Bank of Australia’s decision and Labor’s re-election prospects.

The December quarter inflation figures, due to be released by the Australian Bureau of Statistics (ABS) on Wednesday, are expected to give an indication of whether the RBA will offer any relief for mortgage holders when it next meets on February 17.

But Prime Minister Anthony Albanese told Sky News on Monday that interest rates would not define his Government, stressing he did not believe a cut would determine the outcome of the upcoming Federal election.

His comments were made despite a jarring Newspoll survey for Labor on Monday that showed a majority of voters for the first time expected the Coalition to win the election, with the Prime Minister’s personal approval ratings falling to the lowest level since he took office.

The poll conducted for The Australian revealed a significant shift in voter sentiment against Mr Albanese over the summer, with the Coalition leading Labor 51-49 on a two-party-preferred basis.

Labor has struggled to land its core message of providing cost-of-living relief with voters, many of whom are struggling under the strain of higher mortgages and inflation that has dented household budgets.

Mr Albanese said he would not attempt to do anything that could be conceived as directing the RBA on interest rates.

“We have done all we can as a government to create better conditions for monetary policy to work together with what the government has done,” he told the news channel.

“This has been like landing a 747 on a helicopter pad.”

He said the Government would continue the difficult task of putting downward pressure on inflation while simultaneously “maintaining employment (and) making sure we’ve got that real wages growth”.

The ABS Consumer Price Index on Wednesday will include statistics about price changes for categories of household expenditure.

Treasurer Jim Chalmers on Monday said the Government’s own figures showed the most progress on inflation over the last year had been made in areas like electricity and petrol and furniture and toys and textiles.

At a press conference in Brisbane, he defended Labor’s economic record in making “substantial and sustained progress on inflation.”

The Government expected this week’s inflation numbers to reflect that, he added.

“Any headline inflation with a two in front of it shows that inflation has more than halved since we came to Government. Any headline inflation number with a two in front of it shows that the inflation rate is within the Reserve Bank’s target band,” he insisted.

Dr Chalmers said he did not want to “predict or pre-empt decisions taken appropriately and independently” by the Reserve Bank Board and the Reserve Bank Governor.

“I’ve gone out of my way to ensure that I have focused on my responsibilities. My responsibility is to get inflation down and wages up, keep unemployment low and repair the budget,” he said.

But the Treasurer acknowledged that despite keeping employment lower than Canada, the US, New Zealand, Europe and the UK, Australians were still under pressure.

“We know that no matter what the number says on Wednesday, it’s not mission accomplished when it comes to inflation,” he said.