AN interest rate cut on Tuesday should finally kill the zombie idea that monetary policy is put on hold during election campaigns.
If the Reserve Bank of Australia had been in the habit of putting off interest rate moves until after elections, there would have been a series of moves right after federal polls.
There have only been three such occasions in the past 23 years, the latest being 12 years ago.
There were rate cuts 11 days after the 1990 election, 10 days after the 1993 election and 25 days after the 2001 poll.
But in 1990 and 2001, a cut during the campaign would have made it three cuts in three months, a rare enough occurrence to make it highly unlikely in any case.
And since the latest of those post-election cuts, the evidence has pointed the other way.
In 2007 the RBA jacked the cash rate up to 6.75 per cent, from 6.5 per cent, 17 days into a 38 day campaign.
And now the futures market has fully priced in a cut in the cash rate when the RBA board meets on Tuesday, to 2.5 per cent, from 2.75 per cent.
If those strongly held expectations are vindicated, it should put the final nail in the coffin of the undoubtedly dead zombie.
And a fitting epitaph has already been composed - by RBA governor Glenn Stevens, in testimony to a parliamentary committee less than three months out from the 2007 election.
He was asked whether the timing of the election would have any bearing on the timing of the RBA's interest rate changes.
"I think that the only answer I can give is: if it is clear that something needs to be done, I do not know what explanation we could offer the Australian public for not doing it, regardless of when the election might be due."
"I do not think that there is any case for the Reserve Bank board to cease doing its work for a month, in the month that the election is going to be," he said.
If the economic data made a clear case for moving interest rates, the RBA would have no choice but to act, he said.
"Nor should we have any choice."
Of course, nothing is set in stone.
The RBA may shock the market and stay on the sidelines.
But if it does, it won't be in deference to politics.
It will be because the economic case for a cut just isn't strong enough, and for no other reason.
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