Labor MPs to RBA governor Michele Bullock: cut interest rates now

Reserve Bank governor Michele Bullock is facing intense political pressure to deliver Anthony Albanese a pre-election rate cut on Tuesday, with Labor backbenchers calling for a reduction of up to 50 basis points.

Pictured from top left; Labor backbenchers Mike Freelander, Brian Mitchell and Graham Perrett and RBA governor Michele Bullock. Picture: Supplied

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Reserve Bank governor Michele Bullock is facing intense political pressure to deliver Anthony Albanese a pre-election rate cut on Tuesday, with Labor backbenchers calling for a reduction of up to 50 basis points while urging board members to get off their computer screens and “into the streets and see what is going on in the real Australia”.

Peter Dutton also declared he would welcome the first interest rate cut in more than four years, leaving Ms Bullock politically friendless if she keeps the cash rate at 4.35 per cent.

Despite Jim Chalmers warning government MPs against giving public advice to the Reserve Bank, Labor backbenchers in heartland seats including Mike Freelander, Graham Perrett, Brian Mitchell, Rob Mitchell and Sam Rae said on Monday the case was clear for an interest-rate cut in the first RBA board meeting of the year.

The push from Labor MPs comes as new insolvency data ­released by the Australian Securities & Investments Commission shows 726 business failed in ­January – the highest ever for that month – and as ACTU secretary Sally McManus warns that a failure to cut rates “could tip the economy over”.

Dr Freelander and Mr Perrett said they were hoping for a rate cut of 50 basis points, well above ­market expectations that the cash rate would be lowered from 4.35 per cent to 4.1 per cent.

“I hope they make it a significant one,” Dr Freelander said.

The Macarthur MP, who acknowledged he was not an economist but a pediatrician, said constituents in his outer-Sydney electorate were struggling with mortgage repayments and argued a 50-basis-point cut would “send a very good signal to people”.

Rob Mitchell, who represents McEwen in outer Melbourne, a target seat for the Liberals, said the RBA should deliver “at least” a ­25-basis-point cut on Tuesday and another 25-basis-point cut in its April meeting.

“Whichever way they do it there should be 50 points off by April,” he said. “If they don’t (cut rates on Tuesday), it is going to need some very big explaining.”

Assistant Immigration Minister Matt Thistlethwaite said household borrowers “deserve some rate relief” while Environment Minister Tanya Plibersek declared mortgage holders were “hoping for a rate cut”.

Brian Mitchell, the outgoing MP for the Tasmanian seat of Lyons, said he was concerned the RBA was “squeezing ­mortgage-holders who have got no more to give”.

“The RBA needs to get off its computer screens and into the streets and see what is going on in real Australia and not just the statistics,” Mr Mitchell said.

The Labor Left MP said interest rate rises were not having an ­impact on the spending of people without mortgages, suggesting there needed to be a broader policy response to putting downward pressure on inflation than the “old way” of putting up rates.

“We’ve now got a significant portion of the community which either own outright or have a ­significant amount of wealth to withstand those sorts of impacts, whereas poor, old, first-home buyers and middle-income families have no more to give,” Mr Mitchell said. “And I’m not sure the RBA takes that stuff into account enough.”

While he stressed he respected the independence of the central bank, Mr Mitchell said he did not think members of the RBA board could relate to working-class ­people who were earning below-­average wages. “When you are on the sort of money they are on … I think Bullock is on $1m a year, how can they be in touch with people on $50,000 to $60,000 a year?” he said.

After The Australian revealed the Treasurer had urged his Labor colleagues to avoid making public recommendations to the RBA ahead of Tuesday’s meeting, Dr Chalmers said: “We take no outcome for granted this week when it comes to decisions about interest rates. We’re focused on what we can control as a government, recognising and respecting the independence of the Reserve Bank. I’m not going to apply a political lens to decisions taken by the Reserve Bank.

“They will take their decisions based on the economics, not the politics and the respectful role that I will play in that is to not engage in a running commentary about their deliberations.”

Despite last week issuing a thinly veiled warning to the RBA about cutting rates too early, the Opposition Leader said on Monday he would welcome relief for borrowers. “I really hope, for the sake of Australians who have had 12 interest rate increases under Mr Albanese, that there is a 25-point cut, or if it’s more than that, that’s fantastic, but families need relief,” Mr Dutton said.

Ms McManus will join workers gathered outside the RBA headquarters in Sydney on Tuesday morning and urge the RBA to “act decisively” to lower the official cash rate.

Ms McManus says in a statement to be released on Tuesday that any “stalling” by the bank “poses a risk to economic growth”. She says the bank should cut rates to maintain low unemployment, which was part of its mandate.

“If it doesn’t, the slowdown in consumer spending coupled with the threat to jobs could tip the economy over,” she says.

“That’s a risk working Australians should not have to confront after a long inflation fight.”

With nearly 28,000 companies failing since Labor won power, deputy Liberal leader Sussan Ley said business failures were accelerating under Labor’s “failed economic management”.

“January 2025 was the worst start to a year on record when it comes to business failures,” Ms Ley said.

While money markets were fully priced for a quarter percentage point rate cut on Thursday, bond traders pared back their bets in recent days, tipping an 87 per cent chance of a rate reduction.

That move would take the official cash rate to 4.1 per cent and trim repayments on an average owner-occupier mortgage worth $600,000 by $92 per month.

Deutsche Bank macro strategist Lachlan Dynan said the chances of a “surprise” hold were much higher than the near-certainty implied by financial markets, with profligate government spending lending the case for the cash rate to remain at 4.35 per cent.

“There appears little chance of Australia losing its peer-leading status in fiscal spending, with further sugar hits promised as the federal election approaches, no indications of a desired fiscal tightening from the opposition, and spending upgrades from some states,” Mr Dylan said.

RBA watchers will closely scrutinise fresh quarterly forecasts to be released by the central bank. RBC Capital Markets chief economist Su-Lin Ong expected the new projections would forecast headline inflation – 2.4 per cent in the year to December – holding within the RBA’s 2 to 3 per cent target band through to mid-2027.

“The RBA will likely be increasingly confident that inflation has returned sustainably to target, despite the resilience in the labour market, and can credibly argue that it is meeting its dual objectives,” Ms Ong said.

EQ Economics chief economist Warren Hogan said the RBA should not cut rates and to do so would constitute “an act of appeasement”.

“The case for a rate cut is pretty weak at the moment,” Mr Hogan told Sky News. “It would be based on the idea that there is such a strong view in our community that rates should come down, with an election looming, that the RBA just wants to sort of duck away from any sort of spotlight.”

Mr Perrett, the outgoing MP for the Brisbane seat of Moreton, said retail businesses in his electorate were “just keeping their heads above water”.

“They need people to open their wallets a bit more,” Mr Perrett said.

“While it is an actual economic measure, it is a catalyst for hope. That is what I would particularly like to happen. It is not a magic bullet but it is a sign of things improving.”

Mr Perrett said a rate cut of “half a per cent would be good”.

Mr Rae, the member for the Victorian seat of Hawke, also urged the Reserve Bank to cut interest rates.

“I want a cut,” Mr Rae told Sky News.

“My community needs a cut.”