Further rate rises expected

According to Gavan Ord, the senior manager of business and investment at CPA Australia, interest rates will remain at their currently “elevated” levels, and the only direction they can go from here is up. During a discussion on the latest Accountants Daily podcast, he mentioned that the low interest rate levels observed a year ago, before the series of increases by the Reserve Bank of Australia (RBA), are 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.”

Philip Lowe, RBA governer, expected more than two years to return inflation to the target band, while Mr Ord predicts further increases in the future.

“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.