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John Kehoe

Interest rates will be higher for longer to control prices

Strong household savings and the retreat of free markets will add both demand and supply pressures to inflation.

Interest rate pundits are focused on whether the Reserve Bank of Australia has one or two more interest rate rises to come, but a more important issue is how long rates are elevated for.

There are convincing reasons to believe inflation and interest rates will stay higher for longer.

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John Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s first election. He joined the Financial Review in 2008 from Treasury. Connect with John on Twitter. Email John at jkehoe@afr.com

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    Original URL: https://www.afr.com/policy/economy/interest-rates-will-be-higher-for-longer-to-control-prices-20230523-p5daik