Josh Butler

Liberal politicians have joked they need “divine intervention” at a church service ahead of parliament resuming today.

Federal parliamentarians are attending the ecumenical service, before sitting begins later. Media doorstopped most of the MPs on their way in, with reporters asking what they were praying for, whether they needed “forgiveness”, and whether they prayed for a Coalition reunion.

Liberal MP and shadow minister Scott Buchholz, pointing at the church, joked: “that’s where we need divine intervention”.

Other Coalition MPs laughed and shrugged off similar questions when asked. Nationals MP Anne Webster, asked if she’d pray for the Coalition reuniting, said “absolutely”.

Liberal MP and shadow minister Andrew Wallace, asked about leadership issues, said: “the Sussan Ley has the support of the party room, and she absolutely has my support.”

Journalists also fired questions at Ley on her way in, but she replied “can’t be late for church”.

We’ll expect to hear from Ley and Anthony Albanese on their way out of the church later.

As Jim Chalmers continues his walk down the press gallery in Parliament House, he’s still being needled with questions over the rise in inflation in the Australian economy and the possibility of a rate hike today.

He acknowledges that the inflation data last month was higher than the government would have liked but not “that much higher than we expected”.

Chalmers – as he said before – tells ABC RN Breakfast government spending is not the problem here, it’s things like holiday spending and the ending of temporary rebates.

We know that inflation’s higher than we would like. People are under more pressure than anybody wants. And that’s why the responsibility that we have … is to continue to manage the budget in a responsible way, continue to roll out this cost of living relief.

Patrick Commins

A Reserve Bank rate hike today may be bad news for the roughly 3.3 million mortgaged households, but what about the ranks of would-be homeowners?

Could a hike maybe cool the red hot property market, and even benefit first-time buyers?

The signs are not great. Despite growing predictions of higher borrowing costs in the works, national home prices forged ahead, lifting by 0.8% in January and faster than December’s 0.6% rise.

Dwelling values are up 9.4% over the past year.

While higher borrowing costs are hardly a spur for higher property prices, recent history shows they aren’t necessarily much of a handbrake, either.

Still, CBA economists point to some “crosswinds” for the property market that probably mean prices will grow more slowly than in 2025. They say:

Persistently low supply, high investor activity, federal government support for first home buyers and a broader improvement in the economy are pushing prices higher.

However, affordability constraints, normalising population growth and the prospect of an RBA rate hike … remain headwinds.

The explosion in investor interest does not bode well for an improvement in affordability in 2026, whether we get a rate hike or not.

Total lending to landlords jumped by 1% in January – the fastest pace in over 18 years, according to Westpac.

Patrick Commins

Experts predict Reserve Bank rate rise

It’s Reserve Bank decision day and most experts and investors are betting on a rate hike at 2.30pm – the first since November 2023.

That would take the central bank’s official cash rate target to 3.85%, from 3.6%, with the increase eventually flowing through to mortgage rates.

An uncomfortably and unexpectedly high inflation rate in the December quarter is the key factor that would drive the RBA’s monetary policy board to reverse course after delivering a paltry three rate cuts in 2025.

The board needs to be confident that inflation is heading back towards the midpoint of its 2-3% target band within a reasonable timeframe.

The Reserve Bank governor, Michele Bullock. Photograph: Dan Himbrechts/AAP

The RBA will also release a new set of economic forecasts at the same time as the announcement, in a three-monthly document known as the Statement on Monetary Policy.

In the statement accompanying the decision, we’ll find out how many of the nine-member board voted for a hike, and how many for a hold.

Then the RBA’s governor, Michele Bullock, will step up to face the press pack at 3.30pm to expand on the decision.

If the board does hike, the most obvious question will be: are we going to get another one?

Josh Butler

Liberals to get fewer questions in question time

With the Coalition parties still split, the Liberals will get fewer questions in parliament’s question time today. We’re told that with the diminished Liberals sitting on their own and the Nationals now on the crossbench, the official opposition and the crossbenchers will get the same number of questions – likely five each.

The opposition would normally get more questions than the crossbench.

The Labor minister and leader of the house, Tony Burke, poked fun at the issue as the question time arrangement was confirmed by the government:

It had never occurred to me that, when Barnaby Joyce went to the crossbench, that the entire National party would move to the crossbench with him.

The crossbench is now as big as the opposition, so the arrangements for question time will be changed to reflect that.

‘Three divisive parties of the far right in Australia’: Chalmers

Jumping back to Chalmers speaking to ABC News Breakfast, he’s asked about the growing support of One Nation.

The treasurer says the right isn’t necessarily growing but is “splintering” with One Nation taking votes directly from the Coalition.

It says that we now have three divisive parties of the far right in Australia, and we’ve got one mainstream government which is focused on the things which really matter to people … I think it says that the right of politics is splintering.

Last week’s Essential poll numbers for the Guardian found that 23% of respondents who voted for the Coalition in 2025 now intend to support One Nation.

But it also found that 8% of one-time Labor voters have switched to Hanson.

Daisy Dumas

Nationals deputy says there’s ‘will on both sides’ to end Liberal-National feud

There’s** **“will on both sides” for the Liberals and the Nationals to end their impasse, according to the deputy Nationals leader, Kevin Hogan.

Speaking on ABC’s 7.30 program last night, Hogan described the evening’s meeting between Sussan Ley and David Littleproud as “a really good, civil, cooperative and friendly chat” but that the possibility of the reinstatement of a trio of Nationals frontbenchers had not been agreed upon.

The Coalition split occurred after Ley accepted the resignation of three Nationals who crossed the floor on Labor’s hate speech laws, prompting all of the country party’s frontbenchers to quit in solidarity.

The Nationals deputy leader, Kevin Hogan. Photograph: Mick Tsikas/AAP

The Nationals want the three senators – Bridget McKenzie, Susan McDonald and Ross Cadell – reinstated in their positions as a condition of reuniting with the Liberals.

Hogan, who described himself as a “strong coalitionist”, said that the demand was “obviously a really important thing we have to nut out and have a resolution on” but “wasn’t agreed tonight”. He added:

We want to resolve this. We think a good government is a good Coalition government.

When asked whether the Coalition could be together by Tuesday’s question time, Hogan said that timeframe was “probably unlikely”.

He continued:

No one went to Canberra two weeks ago believing the Coalition was going to blow up that week … but we went down paths and I think there were misunderstandings on both sides and we’ve had that frank conversation tonight too, which I think was really healthy.

Government spending not to blame for inflation rise, treasurer says

Jim Chalmers is probably not feeling his absolute best with the prospect of the Reserve Bank potentially increasing interest rates today, which will affect millions of households.

While (unsurprisingly) the federal treasurer says he won’t comment on what the RBA will do today, he says the government is still focused on reducing the cost of living.

Chalmers has been facing some criticisms over government spending contributing to inflation but he tells ABC News Breakfast there are other causes that are sending prices up.

The tick up that we saw in the most recent data was not about government spending. It was about holiday spending, the withdrawal the energy rebates. It was about some persistent pressures in housing. Some of that pressure was temporary. Some of it more persistent than anyone would like.

Now, when it comes to government spending, really, the main story of the economy last year was public demand took a big step back. It was around, I think, less than a third of what it was the year before, and private demand really gathered pace.

The federal government’s energy rebates ended on 31 December, while other state rebates ended several months ago.

Dan Jervis-Bardy

Ley expected to avoid snap challenge at Tuesday meeting

Sussan Ley is expected to avoid a snap challenge from rival Angus Taylor when Liberal MPs meet face-to-face for the first time since the Coalition split plunged the opposition leader’s position into jeopardy.

After Ley held talks with the Nationals leader, David Littleproud, on Monday night in the first step towards a potential reunion, Liberal MPs will meet at 9am for their usual party room meeting at the start of two weeks of sittings in Canberra.

The meeting is expected to be highly charged after almost a fortnight of intense speculation about Ley’s leadership following the split with the Nationals over Labor’s hate speech laws.

Liberal MPs believe it is only a matter of time before Taylor challenges Ley, after Andrew Hastie’s decision to rule himself out left the shadow defence minister as the only right faction contender.

The opposition leader, Sussan Ley. Photograph: Dominic Giannini/AAP

Liberal MPs across the factions do not expect a motion to spill the leadership will be moved at the meeting, although many concede the situation is highly unpredictable.

Ley and her allies are desperate to shift the spotlight from the Coalition’s internal chaos to the performance of the Albanese government, especially with the Reserve Bank widely tipped to lift interest rates on Tuesday.

Multiple sources said there would likely be only one or two voters separating Ley and Taylor if a vote was held today.

Taylor is bound to support Ley as a member of the shadow cabinet, meaning he would need to quit the frontbench in order to move – or even support – a spill motion.

Senior rightwingers Jonathon Duniam and James Paterson, who were present at secret leadership talks between Hastie and Taylor in Melbourne last week, also remain in the shadow cabinet.

Krishani Dhanji

Good morning, Krishani Dhanji here with you for the first official sitting week of the year – honestly it feels like the politics has just not stopped over summer.

There’s a few big things happening today, including the Reserve Bank’s interest rate decision, and we’ll see the Liberals and Nationals operating as separate entities in parliament for the first time as well. The two parties will also hold their own meetings this morning, where Sussan Ley is expected to avoid a leadership challenge (more on that in a moment).

The government is announcing discounted loans for some Hyundai and Kia electric vehicles to incentivise the EV market.

And the treasurer, Jim Chalmers, has been punted the media rounds for the government today (and will no doubt say that he won’t forecast what the RBA will do) but there will be plenty of talking heads throughout the day.

I’ve got my coffee, I hope you’ve got one too, let’s get started.