14 November 2022
Low interest rates are better for all
Companies (including property companies) usually carry some debt, and when rates rise, this adds to the costs and reduces profitability. Moreover, a lift in interest rates means that shares and property become relatively less attractive, leading to a fall in share prices.
Just like younger people with mortgages and debt, older people should now want low interest rates – their interests are aligned. No need to cajole the RBNZ Governor – low rates will benefit the majority of people.
Of course, no one wants inflation. Younger people now realise what a scourge inflation is (they learn that lesson every time they go to the supermarket), and older people know inflation’s cost from the last time we had it. Higher interest rates are bad for all of us, but they are something we will all have to suffer together to tame inflation.