Interest won't rate

In those circumstances further rate rises had little impact and in the event the 1990 election was fought out on the basis of other issues, such as the environment.

At the federal election in 2004 interest rates became an issue in the campaign, not because interest rates were high, but because the government argued that if the Labor Opposition were elected interest rates would surely go up.

The implicit corollary of this argument was that interest rates would not go up if the government were re-elected. This was all part of the government's campaign that it was a more trustworthy manager of the economy than Labor.

Of course the government was re-elected, but the evidence from electoral analysis suggests that its victory had little if anything to do with the argument about interest rates.

If the direct impact of a small one-off rise in interest rates on support for the government is likely to be negligible in anything other than the short-term - and would certainly not translate into a loss of votes at a federal election almost certainly well over a year away - there is nonetheless the intriguing possibility of an indirect impact.

To the extent that voters bought the argument that the government could be trusted to keep interest rates down, it is possible that interest rate rises will be seen as a breach of that trust and that this will impact negatively on the government's - and the Prime Minister John Howard's - general image within the electorate.

Generalised images of political parties and leaders do have a powerful electoral impact and it is possible that through this more indirect path, the government's campaign at the last election, which proved of little value to it at the time, may come back to haunt it.