Save
Interest rates pegged as ‘unsustainably low’
An economic forecaster has questioned the relationship between lowering interest rates and growth stimulus, saying low global cash rates cannot continue.
Interest rates pegged as ‘unsustainably low’
An economic forecaster has questioned the relationship between lowering interest rates and growth stimulus, saying low global cash rates cannot continue.
BIS Shrapnel chief economist Frank Gelber says the period of rate cutting that followed the GFC is now ending.
“We’re on the threshold of rising interest rates. It’s now just a question of when, where and how much but we do know we are at the end of this period of falling interest rates,” Mr Gelber told nestegg.com.au.
“Interest rates are unsustainably low on a long-term horizon, so we know they’re going to rise.”
Mr Gelber said rate cutting globally has proved ineffective in stimulating economies.
“Reserve banks around the world have learned the hard way that interest rates have very little impact on stimulating growth until businesses are ready to invest, so interest rates have gone out of play as a major policy variable in the US and Australia.
“It doesn’t make sense to invest unless you have capacity restraints and a market so in the US and here, weak profits and excess capacity mean you’re not going to invest just yet until there’s enough growth to absorb your current capacity.”
Looking to the global economy more generally, Mr Gelber said rising interest rates would be buoyed by slow growth, but growth nonetheless.
“The US should recover a little bit, and Europe’s coming through the worst of it so the world economy is on a slow path to recovery,” he said.
“Australia is not going to be much affected unless there’s a major calamity overseas or collapse, and I can’t see there being one. We’re possibly going to be more affected by interest rates, but we’re still an awfully attractive investment destination.”
Savings account
Are ‘nudges’ the secret ingredient to financial wellness?
Are better financial habits a simple reminder away? ...Read more
Savings account
Afterpay launches Money app, bank accounts and retroactive BNPL
Afterpay is upgrading its app-based arsenal. ...Read more
Savings account
2020 saw the fastest increase in bank deposits since the GFC
Bank deposits of Australian households increased by more than 12 per cent last year. ...Read more
Savings account
Australians are putting savings goals ahead of holiday plans
While travel restrictions are soon set to ease, Australians are still putting their savings goals first. ...Read more
Savings account
More than half of Aussie Millennials don’t have a savings plan
Money is remaining a taboo subject for Millennials, which is leading to poor saving habits, a big four bank has revealed. ...Read more
Savings account
COVID-19 sees Aussies reach record-high wealth
New stats have revealed that Aussies are now richer than ever, having stashed away their cash during a year marred by the COVID-19 pandemic and the resulting economic shutdown. ...Read more
Savings account
Saving more during the pandemic? Here’s where that money should go
If you’re finding that you’re saving more during the pandemic, you’re not alone. ...Read more
Savings account
Aussie savings goals put on hold due to COVID-19 pandemic
The COVID-19 pandemic has seen Australians being forced to dip into their life savings, which is impacting their ability to achieve financial goals, new research has found. ...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Savings account
Are ‘nudges’ the secret ingredient to financial wellness?
Are better financial habits a simple reminder away? ...Read more
Savings account
Afterpay launches Money app, bank accounts and retroactive BNPL
Afterpay is upgrading its app-based arsenal. ...Read more
Savings account
2020 saw the fastest increase in bank deposits since the GFC
Bank deposits of Australian households increased by more than 12 per cent last year. ...Read more
Savings account
Australians are putting savings goals ahead of holiday plans
While travel restrictions are soon set to ease, Australians are still putting their savings goals first. ...Read more
Savings account
More than half of Aussie Millennials don’t have a savings plan
Money is remaining a taboo subject for Millennials, which is leading to poor saving habits, a big four bank has revealed. ...Read more
Savings account
COVID-19 sees Aussies reach record-high wealth
New stats have revealed that Aussies are now richer than ever, having stashed away their cash during a year marred by the COVID-19 pandemic and the resulting economic shutdown. ...Read more
Savings account
Saving more during the pandemic? Here’s where that money should go
If you’re finding that you’re saving more during the pandemic, you’re not alone. ...Read more
Savings account
Aussie savings goals put on hold due to COVID-19 pandemic
The COVID-19 pandemic has seen Australians being forced to dip into their life savings, which is impacting their ability to achieve financial goals, new research has found. ...Read more
