Liberal Party federal director Brian Loughane told ministerial pres secretaries earlier this week to be on standby for an election announcement in coming weeks.

The Sydney Morning Herald reports today that ad bookings suggests a November election.

And screen jockeys and economists are speculating about the possibility of another interest rate rise – earlier rather than later – and what it might mean for election dynamics.

A Reuters’ survey has found that just over half of financial institutions are predicting a second rise within months. Market watchers remind us the Reserve Bank tend to deliver rate rises close together.

They’re getting very interested in the idea of a rates rise during the campaign; given that the Reserve Bank Board is due to meet on 6 November.

The political dynamics are extraordinary.

What will happen, they ask, if there is a high inflation figure at the end of October and all the other signs suggest that the Board will have to move? Will it be held back by the caretaker convention?

The Department of Prime Minister and Cabinet’s website says about the caretaker conversion:

The general rule during the caretaker period is that the normal business of government continues until the incoming government’s wishes are known. Several aspects of a department’s usual activities are, however, affected. While departments are concerned at all times to avoid partisanship, the circumstances of an election campaign require special attention to the need to ensure the impartiality of the Public Service and its ability to serve what ever government is elected.

It also adds “following the dissolution the Government assumes a ‘caretaker’ role and by convention avoids… taking major policy decisions likely to commit an incoming Government”.

Would this prevent the RBA from acting? It’s unlikely.

Dr Norman Abjorensen from the ANU’s School of Social Science told Crikey this morning that the convention is just that – convention.

The Reserve Bank is independent.

And its Governor, Glenn Stevens, has taken what might be called a robust approach to asserting its independence.

So it’s perfectly possible that we could get both an election – and a rate rise.

Peter Fray

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