DOWN came the Reserve Bank of Australia’s official rate by 25 basis points yesterday.
As expected, it moved to a 53-year low of 2.5 per cent.
Banks began passing the reduction on to variable mortgage holders.
It’s the first time the central bank has cut rates during a federal election campaign, and came as Labor and the Coalition exchanged blows over who can ease cost of living pressures and support jobs.
Labor says it’s good news for families and business, but the Coalition and shadow treasurer Joe Hockey claim it’s a sign of a “struggling” economy.
“The Reserve Bank has cut interest rates to record low levels because the economy is struggling under Kevin Rudd,” Mr Hockey said.
“It’s damn hard to pay off a mortgage if you haven’t got a job.”
Treasurer Chris Bowen said the cuts were good for home borrowers and businesses — a point recognised by the Coalition in previous election campaigns.
“Now all of a sudden, because interest rates are at record lows under a Labor government, we have Mr Hockey saying this is somehow a bad thing,” Mr Bowen said.
Mr Bowen also pointed to Mr Hockey’s announcement he won’t be providing a budget bottom line forecast when the Coalition releases its election promise costings.
“It’s simply unacceptable,” he said in Sydney.
Mr Hockey says the net outcome of his policy costings and savings will be “bottom line positive”.
“But we are not going to make the mistake Labor made and make rash forecasts of what the surplus or deficit will be in the out-years because the starting point is unbelievable,” he said.
Mr Abbott, who campaigned in the NSW Central Coast seat of Dobell, declined to commit to delivering lower interest rates — as former prime minister John Howard did during the 2004 election campaign.
“What I say is the economy will always be stronger under a Coalition government, taxes will always be lower, government spending will always be lower,” Mr Abbott said.
Prime Minister Kevin Rudd, who was campaigning in his home town of Brisbane, said Mr Abbott and Mr Hockey had failed on economic policy.
“What we’ve seen on the question of the alternative government today is nothing short of a shambles on economic policy,” Mr Rudd said.
Former prime minister John Howard said voters should ask why interest rates are being cut.
“You have to conclude it’s because the economy is slowing,” he told a business lunch in Sydney.
Mr Abbott also used his Dobell visit to remind voters of his promise to scrap Labor’s carbon pricing regime, arguing families would be $3000 better off over six years without it.
The Coalition told Labor not to do deals with the Greens to form a minority government.