In an election defined by the cost of living, the Reserve Bank has the potential to make or break a campaign.
The central bank is set to deliver its next rates decision on Tuesday, four days after the prime minister fired the starting gun for a May 3 federal election.
The interest rate is unlikely to change at this meeting and hence it probably won’t move the political dial, with momentum already beginning to shift in Labor’s favour.
“The economic sentiment is still not great, people are not seeing the tangible benefits yet, but I think there’s still a positive outlook there,” YouGov polling director Amir Daftari told AAP.
“Times have changed and that might be a bit of an advantage for Labor.”
The last time the Reserve Bank delivered a rates announcement during an election campaign, it hammered a nail in the coffin of the then-coalition government by raising the cash rate for the first time in almost 12 years.
But the economic landscape is now changed and many experts forecast further rate cuts in the coming months, after the central bank’s February decision brought down the cash rate for the first time in five years.
“We’re going into an election where inflation is falling, wages are rising, interest rates have started to fall,” Prime Minister Anthony Albanese told ABC radio on Monday.
“We are in a position where we need to build on the foundations that we have laid.”
Mortgage holders in the outer suburbs of Melbourne and Sydney remain a target demographic for both major parties as their electorates could decide the election.
Opposition Leader Peter Dutton has said it would be great to see another rate cut, but claimed inflation would always be higher under Labor.
That is despite Consumer Price Index inflation reaching 5.1 per cent under the most recent coalition government, and coming down to 2.8 per cent in the September quarter of 2024.
Labor has meanwhile continued gaining ground over the coalition in both the Newspoll and YouGov polls, after Mr Albanese put further tax cuts and health policy at the forefront of his re-election campaign.
On the other hand, the temporary reduction in the fuel excise offered by the coalition in its budget reply has not cut through to voters in the same way.
“The tax cuts from Labor are coming through stronger,” Mr Daftari said.
The two leaders will continue their cross-country campaign blitz on Tuesday, after the prime minister visited a hospital in WA and Mr Dutton appeared at a mining equipment factory in the NSW Hunter region.
But these domestic efforts could be for naught, as further US tariffs threaten to tip Australia’s political scales when they take effect on Wednesday, US time.
The government has continued to lobby the Trump administration for a carve-out from 25 per cent tariffs on steel and aluminium, but remains realistic.
“We will always stand up for Australia, and we are prepared for any outcome,” Trade Minister Don Farrell said.
“Let me be clear, we will never trade away the things that make us the best country in the world.”
Australian Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national newswire and has been delivering accurate, reliable and fast news content to the media industry, government and corporate sector for 85 years. We keep Australia informed.
