PM denies rate cut will impact election timing

Anthony Albanese has downplayed suggestions the first interest rate cut in almost five years will be the trigger for a federal election.

The Reserve Bank on Tuesday cut the official cash rate by 25 basis points to 4.1 per cent, delivering much-needed relief for mortgage holders.

With cost-of-living issues set to dominate the upcoming election, speculation loomed an interest rate cut could see the prime minister calling the poll sooner than expected.

Mr Albanese remained coy about when Australians would head to the polls.

"This won't have an impact on the timing of the election," he said.

The election must held by May 17.

The prime minister said preparations were still being made for a federal budget, which is slated to be handed down on March 25.

However, the budget could be scrapped should an election be called before that date.

"I'm certainly not getting ahead of myself, unlike (Opposition Leader) Peter Dutton, who seems to be measuring up the curtains."

Treasurer Jim Chalmers said the cut in interest rates would be welcome news for home owners after successive rate rises.

While he said an election was "imminent", Dr Chalmers said the cut to mortgages should not be looked at through an election viewpoint.

"I have been very careful and deliberately so in not applying a political lens to the decision taken by the independent reserve bank today," he told reporters in Canberra.

"Today's decision was about economics, not politics.

"We acknowledge the timing of the election is a matter for the prime minister, in consultation with his senior colleagues, but we're working towards that budget."

Polls have shown the government will have a hill to climb if it wants a second term, with the latest Newspoll showing the coalition leading Labor 51 per cent to 49 on a two-party preferred basis.

Shadow treasurer Angus Taylor said an interest rate cut was a long time coming but was not enough for households struggling with rising living costs.

"Australian families are poorer than they were two-and-a-half years ago, we cannot afford another three years like we've seen over the term of this parliament," he told reporters in Sydney.

"You cannot beat a cost of living crisis if you can't manage the economy. That's exactly what we've seen under Labor."

Greens leader Adam Bandt said regardless of the Reserve Bank decision, fixed federal terms were needed to avoid increasing speculation in the future about election timelines.

"We are ready. The prime minister will call it whenever, but again, in my ideal world I would like we don't have this kind of speculation every three years," he said.

YouGov polling director Amir Daftari said despite the interest rate cut, the longer the prime minister waited to drive to Government House to dissolve parliament, the better.

"If you were behind in the polls, you need as much time as possible to catch up," he said.

"Given what the polls are showing, (the prime minister) would want to use the last possible day.

"If I was a strategist in Labor, I would advise to wait until the middle of May."