interest rates

The sharp spike in complaints, including nearly 54,000 against banking and finance businesses, shows the effects of financial stress from aggressive interest rate hikes and the explosion of scams, the financial ombudsman’s chief said.

The steepest rate-hiking program in history has largely done its job, but softening inflation may not translate to an immediate pivot on official rates as cautious central banks seek a comfortable buffer, says Neuberger Berman.

While interest rate hikes can be painful, they are crucial tools in the fight against inflation, Integral Private Wealth’s David Simon writes. Anyone in doubt should consider the Zimbabwean hyperinflation crisis of the late 2000s and the perils of short-term fixes.

In a recent market update Sage lamented the RBA’s recent decision to re-engage interest rake hikes after pausing only a month earlier. Policy outcomes have become confusing, the fund manager noted, with the path to a soft landing becoming even narrower.

Australians are being hit hard by rising interest rates as banks seek to keep pace by lifting borrowing costs, and the RBA’s latest move will only add to the pain. Mortgage payments for employee households soared 27 per cent in the December quarter alone, and further increases are expected.

A review of the top stories from the past year reflects investors’ continuing anxiety over the direction of markets as central banks continue their battle against inflation and geopolitical turmoil remains a constant. Many of the same issues appear likely to shape the next 12 months as well.

If consumer confidence remains low, it’s likely businesses conditions will also deteriorate to reflect an economy facing rising rates, soaring inflation and falling house prices.

The Reserve Bank of Australia (RBA) board raised its official cash rate last week for a third consecutive month. The bank has adopted a dovish stance saying future hikes are “not on a pre-set path” and that the economy will likely slow as a result of these hikes.

With annual inflation running at 9.1 per cent, a 41-year high, and a raft of Federal Reserve rate rises to follow, the risk of a hard landing for the US economy has risen sharply. A growing chorus of economists has given up hope that the Fed will be able to engineer a soft landing given its latest predictions.

The Reserve Bank of Australia’s forecast on rate rises was completely wrong. It’s time the RBA owned up and apologised to households.