Interest rate rises have only just begun

This week, theReserve Bank of Australia raised rates for seventh consecutive month to 2.85%.

The hike came as no surprise after September inflation hit 7.3%. Many analysts were also tipping a 0.50% increase over the 0.25% the RBA implemented.

RBA governor Philip Lowe attributed the increase to “global factors” and “strong domestic demand”.

Mr Lowe also expects inflation to continue rising and peak at about 8% later this year.

The big four bank in Australiapassed on the rate raise to consumers.

Over in the US, the Federal Reserve raised rates by 0.75% with Fed chairman Jerome Powell saying it would be “very premature” to think about pausing any interest rate rises.

“The committee is strongly committed to returning inflation to its 2% objective,” he added.

With US inflation currently at 8.2% it may be some time before we see a return to 2%, meaning rates will likely continue their upward momentum.

However, some market participants are anticipating a pivot from the Fed that has talked tough in the past and failed to act.

This time may well be different as central banks have clearly created asset bubbles around the world with their artificially low interest rates for many years and excessive money printing.

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