Treasurer Jim Chalmers’ smile said it all as he emerged to spruik the latest inflation figures | Samantha Maiden

The Treasurer clearly didn’t want to be seen to be telling the RBA what to do. But his face said plenty, writes Samantha Maiden.

Treasurer Jim Chalmers’ smile said it all as he emerged to spruik the latest inflation figures.

It was not a case of mission accomplished, he said, but it was as good a sign as any that the pressure on the Reserve Bank to lower interest rates is now ratcheting up.

The consumer price index fell to 2.4 per cent in the December quarter – the lowest headline inflation level since March 2021.

“Cost of living pressures haven’t disappeared but they are easing,’’ the Treasurer said.

“The worst of the inflation challenge is well and truly behind us.

“We are confident but not complacent about the year ahead.”

Australian Treasurer Jim Chalmers holds a press conference in central Melbourne as the December quarter and monthly inflation figures are released by the ABS. Picture: NewsWire / Nadir Kinani

Naturally, he was at pains not to be accused of dishing out free advice to the Reserve Bank. But with the big banks predicting a rate cut he didn’t need to bother.

“I’m not going to make any sort of commentary which can be confused with giving free advice to the independent Reserve Bank, or making predictions about the decision that they will take when they meet on the [18th] of February,’’ the Treasurer said.

“I respect the independence of the Reserve Bank too much to try and make predictions or to give them free advice, or to try and colour in for them the decision that they will make independently and announce towards the middle of February.”

But the question of when, not if, there’s a rate cut continues to haunt the Albanese Government as the Prime Minister decides when to call the election.

While Labor can’t count on a rate cut, there’s no doubt that it would help the Prime Minister’s election pitch to voters punch drunk by the cost of living.

There’s now two RBA meetings before the next election, whether the PM chooses to call it for April 12 or May 3, 10 or 17.

Those RBA meetings are on February 18 and April 1.

Some observers believe that the RBA may be cautious to pull the trigger in February.

That leaves one more chance when the RBA meets in early April.

The relief can’t come soon enough for homeowners.

The Commonwealth Bank and now Westpac are both forecasting rate cuts next month, followed by three more cuts by Christmas.

And the longer term outlook is even better, with predictions of interest rate cuts of around $8000 a year on average by the end of 2026, according to Deloitte Access Economics.

It’s great news for homeowners that have had their mortgage increase in many cases by $12,000 a year or more based on an average home loan of $600,000.

“Deloitte Access Economics expects the Reserve Bank to cut the cash rate by a total of 75 basis points through the 2025 calendar year, followed by a further 75 basis points in 2026.

By the end of the rate-cutting cycle, a household with an average-sized mortgage and a variable mortgage rate would be around $8000 better off in today’s dollars,’’ Deloitte Access Economics Partner Stephen Smith said.

The PM refused to be drawn on an election date but conceded that he is “always pleased to see Australians getting relief from inflation”.

“Inflation punishes people who have less income more than people who are wealthy,’’ he said.

“I am pleased because I want Australians to have their living standards grow and what we’re seeing here is inflation is going down, wages are going up, while employment is being maintained with low unemployment. I think that the tri-factor of lower inflation, higher wages and low unemployment is a good outcome for our country.”

But despite the new inflation figures, opposition treasury spokesman Angus Taylor cautioned that core inflation remains stubbornly above target.

“Sadly, we have seen a crash in Australia’s standard of living,’’ he said.

“Since Labor came to power, we have seen the biggest [decline] in Australian household standard of living in our history, the biggest of any of our peer countries, and we know right at the heart of it is a big increase in the price of everything, over 10 per cent increase in prices for Australian families.

“This is a situation that is worse than Canada, worse than the UK, worse than the United States, worse than our peer countries across Europe. It is a diabolical situation and the Treasurer is out today congratulating himself and telling Australians that this is a soft landing.”

The big question is whether an interest-rate cut – or two – will be enough for voters to forget about all that and give the Albanese Government a second chance.

Originally published as Treasurer Jim Chalmers’ smile said it all as he emerged to spruik the latest inflation figures | Samantha Maiden