Why higher interest rates are the new normal
Financial analysts suggest that higher interest rates may become the 'new normal' due to global economic shifts like AI development, geopolitical conflict, and decarbonization. These 'megatrends' are expected to influence the neutral interest rate, potentially keeping borrowing costs elevated for the foreseeable future.
Why it matters
This outlook challenges the expectations of mortgage holders and investors who were hoping for a return to the low-interest-rate environment of the past.
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Share A A A Trying to guess where interest rates might move from month to month is a favourite pastime for many people in the financial markets (not to mention finance journalists).
And lately, we’ve all had plenty to speculate about. The surging oil price is making our inflation problem worse, prompting markets last week to price in up to three more Reserve Bank interest rate rises, which would push the cash rate above 5 per cent.
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