RBA interest rate outcome set to influence Australian federal election timing
Mortgage holders won’t be the only ones eagerly awaiting the Reserve Bank’s decision on interest rates.
Federal MPs will also be watching to see if a rate cut will be enough for Prime Minister Anthony Albanese to trigger an election.
While the election is not due to be held until May 17 at the latest, there is speculation the first lowering of interest rates in almost five years would lead to a national poll being called sooner than expected.
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By continuing you agree to our Terms and Privacy Policy.With cost-of-living issues set to dominate the election, any reduction in interest rates would be front of mind with voters, YouGov’s polling director Amir Daftari says.
“If there is a rate cut, then that might be psychological relief among voters that things are going in the right direction,” he told AAP.
“It’s an inopportune time for Labor to win but a rate cut would be an opportunity for the government to get ahead of (cost-of-living) issues.”
Opinion polls have shown the government still has a hill to climb to win a second term, with the latest Newspoll showing the coalition leading 51 per cent to 49 on a two-party preferred basis.
The coalition remained ahead of Labor in the latest Roy Morgan results, which pointed to a hung parliament after the next election.
Modelling from YouGov projected the opposition would win the most seats, 73, at the election, but it would not be enough for the coalition to govern in their own right.
Mr Daftari said even if there was an interest rate cut, the longer the prime minister waited to drive to Government House to dissolve parliament, the better.
“If you were behind in the polls, you need as much time as possible to catch up,” he said.
“Given what the polls are showing, (the prime minister) would want to use the last possible day.
“If I was a strategist in Labor, I would advise to wait until the middle of May.”
Interest rates have been on hold at 4.35 per cent since November 2023.
If the Reserve Bank decides not to cut interest rates on Tuesday, there would be just one more meeting of the central bank, April 1, before the election deadline.
Mr Daftari said an interest rate cut would make a difference at the ballot box.
“That would signal that more rate cuts will come, and that might have an effect,” he said.
