Reserve Bank Governor Michele Bullock may need her bulletproof vest when she faces the media next Tuesday following the bank’s two-day board meeting.

The US Federal Reserve’s sharp half-percentage point rate cut this week (contrary to most dovish forecasts) will put a lot of public pressure on the RBA, which is expected to keep the Australian benchmark interest rate at 4.35%.

Bullock (who will surely have to abandon his thoughts on raising interest rates) can argue that the situation in Australia is different – namely that inflation is still too high and that if we do nothing about it, we will all end up worse off.

Moreover, US interest rates are still higher than ours and the country is experiencing healthy productivity growth, unlike Australia. Moreover, economists say the sheer size of the US rate cut sends mixed signals: it boosts confidence because it lowers interest rates, but hurts confidence because it is a sign that the outlook is poor.

Thursday’s strong Australian employment figures again highlighted the paradox of a buoyant labor market in an economy that is barely breathing.

Regardless of the interest rate debate among experts, the US’s big move will certainly make it harder to explain the RBA’s stance to families struggling to pay their mortgages and living expenses.

Bullock recently acknowledged the plight of those who are really doing badly, in an analysis that inevitably reflects the cold side of financial reality.

“Among homeowners with variable-rate loans (…) we estimate that about 5% are in a particularly difficult situation,” she said.

“Although this group is relatively small overall, those affected have had to make quite painful adjustments to avoid falling behind on their mortgage payments. This includes things like cutting back on spending on essentials, switching to lower quality goods and services, dipping into their savings or working overtime. Some may end up making the difficult decision to sell their homes.

“A really important point to note here is that low-income borrowers are overrepresented in the group of people who are really struggling,” she said.

For the person who has to sell his house, it is no consolation to belong to a small minority.

Regardless of whether the Reserve Bank’s stance of not cutting interest rates, expected on Tuesday, is the right policy, it could face even greater criticism on Wednesday when monthly inflation figures are released.

In its regular CPI forecast, Westpac expects inflation to fall by 0.2% in August and reach 2.7% annually, putting the annual rate within the RBA’s desired range of 2-3%. The moderation in inflation in August was the result of the household energy bill refund.

The monthly CPI numbers are less reliable than the quarterly numbers, but if the August numbers are good, many voters will be upset that the bank has not acted.

This is especially true when one recalls Finance Minister Jim Chalmers’ statement that high interest rates are “destroying” the economy. Reports of disagreements between the Bank and the Government are likely to appear in the news again.

Chalmers, meanwhile, stresses that the Budget’s increase in rent subsidies came into effect on Friday and that various payments will be increased due to recent indexation. He is trying to frame the economic debate as one between Labor’s cost-of-living cushion and the opposition’s efforts to cut government spending.

Peter Dutton’s strategy of withholding most details of a coalition government’s policies until shortly before the election has tactical advantages and disadvantages. If the policies are announced, they are open to attack or theft by the government. If they are kept under wraps, they are even more vulnerable to fearmongering.

The government is already stoking two fears: first, that the Liberals will rip away the workers’ rights package that the Albanese government has put in place, and second, that they will cut spending in vital areas.

The Labor Party attacked opposition finance spokeswoman Jane Hume, who told ABC at the weekend: “The government has spent an additional $315 billion since coming to power, which the Coalition has not committed to and did not commit to at the last election.”

The government is making a big deal out of it, even though Hume insists that “we will not cut essential services.”

Albanese told a press conference on Thursday: “The Coalition is promising $315 billion in cuts. They see the indexation of age pensions, they see the increased support for childcare and aged care, they see the increased investment in social housing, they see the increased investment in a future made in Australia, including the National Recovery Fund – they see all of that as waste.”

Chalmers documented all indexation increases totaling $315 billion.

The Liberals must present their plans for cuts before the election. But experience shows that the reality later often looks different than what the parties promise beforehand. This applies to both sides of politics.

The government is now under more pressure than at any other time in its tenure. The prime minister is unpopular. Time is running out, with many initiatives still to be implemented. The government is deeply frustrated that the Senate, which previously gave it easy time, is blocking bills, particularly on housing, thanks to an unholy coalition-Green alliance (the government has not yet got to the point of using Paul Keating’s description of the Senate as “unrepresentative crap”).

The general view, based on the polls, is that Labor is heading for a minority government. A Freshwater poll this week showed the Coalition ahead by 52% to 48%, which would give the Coalition a chance of a minority government in a two-party election.

The poll results reflect a largely negative assessment of the government. If the Coalition can use this as a yardstick, it will maximise its chances of saving Labour a lot of trouble. Labour, in turn, needs to shift the fight from a referendum to an election – between a government that people know, however flawed, and an alternative that would be a leap into the unknown.