It remains one of the most memorable – for all the wrong reasons – images of this century. President George Bush, on the deck of the USS Abraham Lincoln, in May 2003, delivering a speech on the war in Iraq with a huge banner behind him declaring “mission accomplished”.

The war would continue well into the next decade, amplifying terrorism around the globe while destabilising the Middle East. We see that ongoing destabilisation even now.

Illustration by Simon LetchCredit:

There’s been no thought of the Reserve Bank producing a “mission accomplished” banner to put behind governor Michele Bullock when she stands up next week to confirm inflation in Australia is continuing to fall, the jobs market remains extraordinarily resilient and the economy is expanding.

Most economists and financial markets expect Bullock to reveal on Tuesday a further quarter percentage point cut in official interest rates after the bank’s monetary policy committee meeting. It would take the cash rate down to 3.6 per cent, be the third rate cut this year and be the first time the bank has delivered back-to-back rate cuts since March 2020, when the RBA sliced the cash rate twice within a fortnight.

Even if Bullock and the bank hold fire at their July meeting, markets and economists are united in believing a rate cut in August, and another towards November, are on the cards. Such an easing of official interest rates without the economy having tanked or unemployment soaring (or a combination of both) would be in stark contrast to the Reserve Bank’s long history.

The fight against inflation in the late 1980s led to the nation’s deepest postwar recession. Unemployment had fallen to 5.8 per cent in late 1989, just as the bank lifted the cash rate to 18 per cent. It didn’t get back to 5.8 per cent until 2003.

The bank had a good global financial crisis in terms of avoiding a recession with only a modest increase in the jobless rate, though its interest rate settings contributed to an extremely strong Australian dollar, which hollowed out non-mining parts of the economy.

And the less said of the pre- and post-COVID period – interest rates too high before the pandemic, kept too low for too long after the worst of it – the better.

Bullock and the bank have copped plenty of criticism from both sides of the........

© The Sydney Morning Herald