There are constantly mixed messages in the media which we all know can be confusing. Let’s look at the facts for what they are. What exactly determines rates? Watch JB explain it in less than three minutes below:
If you’ve read any of JB’s recent blog posts on rates, you’ll recall him talking about how we’re living in a world without inflation. And to put it simply, where there is no inflation, interest rates stay low. (JB explains further in the video).
The Reserve Bank has restrictions in place to stop the banks from borrowing off shore to keep the risk low, but that does mean that bank funding costs are going up. So because of that there is a small increase in rates overall, but we don’t see them going much higher than they are for the foreseeable future.