History says central banks prefer not to cut rates during an election but if inflation was madly out of control or an economy was tanking into recession, a Reserve Bank Governor and the board would move on rates. If they didn’t, they should be sacked. The ‘bookies’ or money market experts think there’s a 16% chance of a cut at 2.30 pm today but it really should be 0%.

While the Australian economy isn’t collapsing and inflation is heading down (explaining why a rate cut isn’t essential right now), even Paul Keating’s galah in the local pet shop is telling us that we’ll see a post-election rate cut in May.

In case you don’t read the scribblings of the country’s top economists, here’s what the CBA economics team went public with after seeing the February CPI, which showed annual headline inflation was a comfortable 2.4% and underlying inflation was 2.7%.

This led the bank’s economist Stephen Wu to write: “Today’s inflation print appears broadly in line with Commonwealth Bank (CBA) Group economists current forecast for trimmed mean inflation of 0.6% in the March quarter, 2025, with the annual growth rate slowing from 3.2% to 2.8%. We think such a reading will be enough to see the RBA cut in May, with the Board using the April 1 meeting as a potential opportunity to lay the groundwork for another reduction in rates. We expect the RBA to deliver further 25 basis point rate cuts in August and November for an end year cash rate of 3.35%.”

So, the message is this: the CBA thinks there’ll be three more cuts this year, no matter who wins the election on May 3, which will be good for business and consumer confidence, the stock market, our super balances, job creation and economic growth.

Only President Donald Trump with his vindictive tariffs could spoil this expected economic party. So, keep your fingers crossed that all his blustering threats end up being less aggressive than what stock markets have been factoring into their selling since February 14.

Overnight, the Dow Jones and S&P 500 stock market indexes ended in positive territory, but the tech-heavy Nasdaq was down close to 0.5%. It has been this market barometer that has been feeling most of the heat from the Trump tariff threats.

This index is down 14% since February 19, while our market has been slugged 8.3%. You can primarily blame one Donald J. Trump for that. The only plus coming from his economic selfishness is that the RBA would be worried that retaliation from the EU and China (in particular) could lead to a trade war and an economic slowdown or even a recession.

That’s when we could see more rate cuts from the RBA. However, a tit-for-tat tariff war could spark a global spike in inflation. That could be a good reason for our central bank to keep its rate cut decision ‘on hold’ until after April 2, when Trump outlines his tariff plan, and we find out who’ll lead the country for the next three years.

The AFR’s Michael Read remembered previous rate changes during an election campaign and here they are:

1. In 2007: RBA boss Glenn Stevens raised the cash rate to 6.75%, which helped Kevin Rudd KO John Howard.
2. In 2013: Stevens ‘cut for Kev’ didn’t help Labor and Aussies voted in Tony Abbott.
3. In 2022: Governor Phil Lowe raised the cash rate from 0.1% to 0.35%, which didn’t help PM Scott Morrison, whose goose was cooked from the time of his Hawaiian holiday as the country fought bushfires.

As I said earlier, there’s no need for the RBA to move on rates during this election campaign, especially as we learnt yesterday that home prices rose 0.27% in March and are now back in record territory.

That said, our slowing economy and the tariff threats from Donald Trump make it pretty well backable that we’ll see one in May. And possibly two more before Christmas!