Interest rate cut a win for politics, but inflation battle still ahead

The rate cut, as Jim Chalmers says, is about the future health of the economy, but I cannot accept the Treasurer’s statement that the rate cut was not about politics.

Of course it was. However, as the Reserve Bank of Australia governor has warned, the battle against inflation is yet to be won (“The one-cut wonder”, 19/2).

As an aside, Anthony Albanese may now bring forward an early election because there is no guarantee the next rate move will continue to be down. It is arguable the recent artificial cut has been engineered by government subsidies, which are about to come to an end but may be extended as an election promise.

Peter D. Surkitt, Sandringham, Vic

Simon Benson suggests that the Labor government should cool its jets (“Albanese shouldn’t bank on another pre-election boost”, 19/2).

It also should be circumspect if it thinks this cut will turbocharge its chances at the election for two reasons.

First, the RBA’s decision was long expected. Those on a mortgage will save around $90 a month on average, the equivalent of a couple of cartons of cheap beer. Second, it provides no relief for renters.

Jim Chalmers reckons the government has achieved the quadrella: taming inflation, increasing wages, producing a surplus and finally bringing down rates.

If only he and the government hadn’t promised to arrest the cost of living or to bring down power prices for households and businesses by $275. These were core commitments in 2022 and voters may have identified that they are material to their decision at this year’s poll.

Kim Keogh, Claremont, WA

So a couple with a $400,000 mortgage will save $1000 a year with the 0.25 per cent rate cut. The $20 a week saving will mean they can buy a few extra food items but nothing for the rising gas, electricity, water and insurance costs. But the government is probably celebrating.

Chas Barter, Lower Mitcham, SA

What effect will a 0.25 per cent cut in interest rates have on the economy? Not a lot.

It will provide some relief to besieged home loan payers but have very little effect, if any, on the economy. Just listen to the government crowing about its massive achievements. What’s the old saying: one swallow does not make a summer?

Julie Tadman, Upper Caboolture, Qld

Can the Treasurer really be saying that 12 interest rate increases under the current government were all the fault of someone else and not due to his policies but that one small interest rate decrease proves the success of his policies?

Malcolm Stephens, Moss Vale, NSW

It would appear the politicising of RBA is complete. The board used to meet in the first week of the month, so why the change to mid-February – closer to any election date? The cut saves average mortgagees around $20 a week, enough to cover two or three lattes. Surely the big issue is the cost of living generally, which has ballooned under this profligate government.

John Mullavey, Howrah, Tas

No doubt the Albanese government will try to wax lyrical about how it has managed the economy in a way that has resulted in an interest rate cut.

However, we should not forget that Labor did not inherit a situation where there had already been many consecutive interest rate increases. Twelve of the 13 interest rate increases happened on its watch. So, for the record, it’s interest rate increases 13 and the Albanese government 1.

Neil Hunter, Morley, WA

It’s pleasing to see an RBA cut to official interest rates, albeit a very small one, with little economic evidence that lower inflation is here to stay.

However, the question is: what will keep interest rates down? Inflation is heavily influenced by the cost of energy in all its forms, but does anyone see our government focused on getting energy costs down? With renewable energy being pursued ideologically regardless of cost, we have no idea about what the inflationary effects will be in the medium to long term.

What we do know is that businesses are closing at record rates primarily because of high input costs, particularly energy and wage costs.

Brian Barker, Bulimba, Qld