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Higher inflation could tighten the squeeze on borrowers

IDS LimitedAdviser Groups Higher inflation could tighten the squeeze on borrowers

Higher inflation could tighten the squeeze on borrowers

A man rising coins

The economy is moving back to some semblance of normality and so should interest rates.

Economic growth and inflation, the two big indicators for the RBNZ, are approaching historically normal conditions. However, many parts of the economy are highly abnormal, such as house prices, borrowing and immigration.

Nevertheless, the time has come for the RBNZ to begin increasing interest rates – it is no longer right to keep fuelling a borrowing binge and housing boom for the sake of abnormally low inflation.

Interest rate increases after nearly a decade of historic lows will shock some. It will be frightening for those who have borrowed large sums recently, but will be a welcome increase for savers.

For more information read article on stuff.co.nz.