But isn’t this super political?

I mean, yes. Of course it is. But it ALWAYS is. And given the figures, not cutting rates is actually the MORE political decision.

The next RBA board meeting won’t be until April. That will most likely fall during the election campaign. It is also the first meeting with the newly installed second RBA board of ‘experts’ to advise the board making the cash rate decision (like they didn’t have the best experts in the game already, working with the RBA)

This second board of economists will likely make things even more political, because whether they want to believe it or not, economists are not mythical creatures completely devoid of political ideologies, influenced solely by facts, figures and data. Economists choose the school of economics they want to invest in and then a lot of them pretend that social science is a universal law. (The market would NEVER price gouge! It’s always right!)

There is also the thought that this board, having been selected by Jim Chalmers, will not want to seem like they are favourable to him or the government and therefore have even more reason not to move during the election campaign. RBA boards don’t like to move during election campaigns if they can help it – in fact they usually prefer just to turtle as much as possible to avoid even the smell of being considered political.

But like 2022 when it was left a bit too late, leaving no choice but to raise rates in the May election campaign, the board has seemingly left it a bit too late NOT to cut rates this time round. Traditionally, the bank usually does a couple of interest rate cuts in a row. And not having a March meeting in this new schedule leaves the April meeting as the next cut. Given that history it would be more political to not cut in April, election campaign be damned!