I have argued repeatedly that the Albanese government desperately needs the Reserve Bank of Australia (RBA) to cut interest rates to bolster its re-election chances.

The record decline in real household incomes and the ongoing cost-of-living crisis have negatively impacted Labor’s polling position.

Therefore, Labor needs the RBA to cut interest rates to regain voters’ confidence that the worst is over.

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The latest Roy Morgan polling helps my argument, with Labor (up 2.0%) and the Coalition (down 2.0%) now degree pegging on a two-party most well-liked foundation at 20% apiece. This outcome was pushed by the decline in trimmed imply inflation and the expectation that the RBA will quickly minimize charges.

Michele Levine, CEO of Roy Morgan, defined the outcome as follows:

“This week’s increase in assist for the ALP got here after final week’s lower-than-expected quarterly inflation estimate launched by the Australian Bureau of Statistics (ABS) confirmed the Client Value Index (CPI) at 2.4% within the 12 months to December 2024, down 0.4% factors from the earlier quarter”.

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“The carefully watched ‘trimmed imply’ measure – which strips out risky gadgets akin to meals, power, and petrol – dropped 0.4% factors to three.2% – its lowest since December 2021″.

“The falling inflation has raised hopes amongst many who the Reserve Financial institution will minimize rates of interest at its subsequent assembly in mid-February. A minimize to rates of interest will present reduction to thousands and thousands of mortgage holders round Australia which have endured 13 rate of interest will increase since early 2022″.

“The Albanese Authorities’s probabilities of re-election this 12 months could be significantly enhanced if the Reserve Financial institution minimize rates of interest for the primary time since November 2020 throughout the pandemic”.

Primarily based on this polling, the election outcome could be a hung parliament and ‘too near name’. The ALP or Coalition would require the assist of minor events and independents to type a minority authorities.

Monetary markets count on the RBA to chop charges both in February or April, forward of the election.

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The RBA holds the important thing to the Albanese authorities’s re-election.