Any hopes mortgage holders have that interest rates could soon fall have been dashed as the global fight against inflation continues.
The head of the US central bank said the battle to control inflation is far from over, meaning the path to lower interest rates is more difficult to achieve.
“The worst thing we can do is fail to restore price stability. If you fail to restore price stability… inflation comes back,” US Federal Reserve chair Jerome Powell said.
The Bank of England governor Andrew Bailey backed up these comments, sending the market into a panic.
“We will need to keep interest rates high enough for long enough to ensure that we get the job done,” Bailey said.
“Whatever happens we will do what is needed to get inflation back to normal.”
But what does this all mean for Australia?
Well, forecasters had thought interest rates would stop rising globally and come back down in the short term.
Read Related Also: China's economic crisis is still getting worse
But this has all changed with concerns the rate will stay stagnant – and high.
In Australia, the big banks previously predicted there would be two interest rate cuts next year.
Now, the market forecasts none.
The cash rate in Australia currently sits at 4.1 per cent after it was held for the third time at the Reserve Bank of Australia’s September decision.
The central bank said inflation had passed its peak but continued with its signature phrase that “further tightening of monetary policy may be required” in the future.
“Inflation is coming down, the labour market remains strong and the economy is operating at a high level of capacity utilisation,” the bank said.
