Higher for longer : why low rates are relics of the past

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• Higher for longer : why low rates are relics of the past

  Mortgage holders should expect interest rates to stay high for longer, whether or not the Reserve Bank of Australia (RBA) raises them again. The RBA warns that intense global competition for capital from AI and data centre companies is pushing up the neutral interest rate, and assistant governor Christopher Kent says there is reasonable evidence neutral rates are rising in Australia and abroad. The cash rate is 4.6%, its highest in 15 years, and markets do not expect rates to fall below current levels until at least mid-2028, with another rise by mid-2027 almost fully priced in. The term premium has climbed to a 12-year high, and Commonwealth Bank chief economist Luke Yeaman argues that higher government and AI spending makes rates less effective at curbing demand. Federal government spending reached 26.9% of GDP in 2025/26, the highest in 40 years excluding COVID-19, and HSBC's Paul Bloxham urges further spending cuts in the mid-year fiscal update expected in December.

  northweststar.com.au·19/10, 06:30▲ DXY▼ PAXG/USDT▼ QQQ▼ SPYinterest ratesRBAAustralia
• Higher for longer : why low rates are relics of the past

  Mortgage holders should expect interest rates to stay high for longer, whether or not the Reserve Bank of Australia (RBA) raises them again on Melbourne Cup day. The RBA says intense global competition for capital from AI and data centre companies is lifting the neutral rate, and Assistant Governor Christopher Kent said there is reasonable evidence neutral rates are rising in Australia and abroad. At 4.6%, the cash rate is the highest in 15 years; markets still almost fully price in another rise by mid-2027 and do not expect rates to fall before mid-2028. CBA chief economist Luke Yeaman said heavy government and AI spending makes rates less effective at curbing demand, while HSBC chief economist Paul Bloxham urged the federal government to cut spending in its mid-year fiscal update in December.

  hepburnadvocate.com.au·19/10, 06:45▲ DXY▼ PAXG/USDT▼ QQQ▼ SPYinterest ratesRBAAustralia
• RBA extreme interest rates push economy towards potential recessionaustralianherald.com·20/10, 02:15▼ AUD/USDAUDUSDRBAinterest rates
• RBA extreme interest rates push economy towards potential recession

  Commentator Stephen Koukoulas argues that the Reserve Bank of Australia's interest rates, at a 15-year high, are pushing the economy towards recession. Unemployment has risen to a five-year high of 4.7%, consumer sentiment is near 50-year lows, and nationwide house prices are down around 7% from their peak. Dwelling approvals have fallen 15% since the February peak, and iron ore has slumped to US$90 (AU$129) a tonne, near a decade low. The author says whether a recession occurs depends largely on AI and data centre investment and household spending, and he considers a November rate hike unfathomable. He also argues that once the price effects of petrol, tobacco, construction and electricity are considered, August inflation would be 2.6%.

  independentaustralia.net·19/10, 22:45▼ AUD/USDRBAinterest ratesAustralia
• Higher for longer : why low rates are relics of the past

  The RBA has warned that intense global competition for capital from AI and data centre companies is pushing up the neutral interest rate, so borrowers should expect rates to stay higher for longer. The cash rate of 4.6% is the highest in 15 years, and markets see another hike by mid-2027 as almost fully priced, with no cuts expected before mid-2028. A 12-year-high term premium is also tightening financial conditions. Commonwealth Bank chief economist Luke Yeaman argues that heavy government and AI-related spending makes rate hikes less effective, so the RBA may have to hit households harder, and warns that fiscal stimulus would be a serious mistake. HSBC chief economist Paul Bloxham urges further federal spending cuts, noting federal spending hit 26.9% of GDP in 2025/26, the highest in 40 years excluding COVID-19.

  cootamundraherald.com.au·19/10, 10:15▲ DXY▼ PAXG/USDT▼ SPY▼ XAUT/USDTinterest ratesRBAAustralia
• Higher for longer : why low rates are relics of the past

  Mortgage holders should expect rates to stay higher for longer, as the RBA warns that competition for global capital from AI and data centre companies is lifting the neutral rate. Assistant governor Christopher Kent said there is reasonable evidence neutral rates are rising in Australia and abroad, and the 4.6% cash rate is the highest in 15 years. Markets almost fully price in another rise by mid-2027 and do not expect rates to fall below current levels by mid-2028, while the term premium has hit a 12-year high. CBA chief economist Luke Yeaman argued that heavy government and AI spending makes rates less effective, so the RBA would have to hit households harder, and warned that loose fiscal policy would force it to push rates higher still. Federal government spending reached 26.9% of GDP in 2025/26, the highest in 40 years excluding COVID-19, and HSBC's Paul Bloxham urged further cuts in the mid-year update due in December.

  southcoastregister.com.au·19/10, 08:45▲ DXY▼ XAU/USDinterest ratesRBAAustralia

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