An end to central-bank tightening will not necessarily herald a return to easing, according to ANZ Chief Economist Ricard Yetsenga. Indeed, rates are likely to stay relatively high for some time.
Speaking to the 2023 ANZ Debt Conference, Yetsenga said talk of a ‘terminal’ US Federal Reserve rate - a term that speculates the last rise before rates begin to fall - implies any decline would happen quickly. He doesn’t think that’s the case here.
“Much of the tightening we’ve seen is likely to stick for quite some time,” he said, noting much of the drivers of the rate changes were structural, and would “last”.
“After terminal, there's going to be less action than we think. Or maybe less than we hope.”
Yetsenga said the other side of the interest rate cycle would look very different.
“I don't see any real evidence for the idea that rates can go up quickly and come down anywhere near as quickly,” he said.
Over 300 people attended the ANZ Debt Conference. Now in its 13th year, the conference is the most prominent and largest of its kind in Australia.
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