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Expect rates to stay higher for longer, and plan for rises

Tax

Interest rates will remain at today’s “elevated” levels and the only way from here is up, says the senior manager of business and investment at CPA Australia, Gavan Ord.

By Philip King 8 minute read

Speaking on the latest Accountants Daily podcast, he said the low rate levels of a year ago, before the run of RBA rises, were unlikely to return.

“We will have elevated interest rates for quite some time — above the average of the last 10 years but more consistent with the average of the prior 10 years,” he said.

“If you listen to some economists, interest rates are actually coming back to where they normally sit. We’ve actually had a very long period of ultra-low interest rates from the Global Financial Crisis. 

“Will we go back to 0.1 per cent? If we did we’d be in some sort of economic crisis.”

RBA governor Philip Lowe said it would take more than two years to return inflation to the target band and Mr Ord said more increases were on the cards.

“If you’re doing your planning, expect maybe a couple more rate rises before they reach the peak. When will they start to reduce rates? We just don’t know,” Mr Ord said.

 

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