Central banker speak is very different to political speak. Very different indeed.

Still, it is interesting to dip into the Reserve Bank Board minutes from last month to see the reasons why it decided “a further increase in the cash rate was needed to contain inflation to 2–3 per cent in the medium term… [T]he cash rate should be increased by 25 basis points to 6.75 per cent, effective the following day.”

It’s all very polite, but the suggestion is clear. John Howard and Peter’s Costello’s political spending helped raise rates. Look under the heading Domestic Economic Considerations:

Members noted the recent changes to fiscal policy projections. At the time of the Australian Government’s May budget, the surplus had been forecast to be around 1 per cent of GDP in 2007/08 and to rise gradually in subsequent years. Since May, parameter variations had suggested an increase in the surplus to around 2½ per cent of GDP over the period covered by the forward estimates.

New expenditure and revenue measures announced since the budget and in the early part of the election campaign had since reduced the projected surplus to around 1 per cent of GDP. This meant that fiscal policy was roughly neutral in its overall effect on growth as conventionally measured, the recent initiatives having offset the ‘automatic fiscal stabilisers’.

No wonder RBA Governor Glenn Stevens came out with his call just days later for the pollies to put a lid on their election spending.