Stephen Walters, Chief Economist for the Australian Institute of Company Directors (AICD), is out with a flash warning for the Australian economy as the real risk of knock-on cost squeeze from diverging interest rates threatens to bleed over into Australian money markets.
Key quotes
“Australian “banks don’t just fund themselves domestically, but they’re active in offshore markets, including short-term money markets in the US.
As interest rates in the US are going up means the funding costs for Australian banks are also going up.
It’s probably going to feed through into mortgage rates… causing a bit of a squeeze in the household sector.
Households need to brace themselves over the next five years at least that interest rates will be going up.”
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