The recent interest rate increases in the US, Britain and Australia have caused volatile trading in financial markets, with sharp losses on some days.
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The outlook is a concern to share and property investors with more interest rate rises considered likely.
Higher interest rates increase the cost of borrowing for companies. Most include debt in their financial structure and the extra cost comes straight off their bottom line. Higher interest rates also change the relative appeals of fixed interest versus shares and property.
If a company pays a steady dividend, and government bonds and fixed deposits start paying more interest, some investors will switch from shares to fixed interest, reducing demand for shares.
The big unknown is how much rates will rise. Not even the central banks know.
Similarly, if a property is paying a steady rental income and fixed deposit rates and borrowing costs increase fewer people will want to buy property.
Investments paying little or no income are worst affected by rate rises. These include growing companies that are reinvesting profits to expand their businesses rather than pay dividends, such as the high-priced US technology stocks. Companies paying high dividends are less affected.
Gold, which pays no dividends, has fallen from US$2050 to US$1850 since early March. Likewise crypto-currencies pay no interest and so are falling. The bitcoin price has dropped from US$47,500 to around US$31,000.
The big unknown is how much rates will rise. Not even the central banks know. They will respond to conditions as they develop.
There appears to be several causes of the inflation that has triggered the rate rises.
One is the disruption to the supply of goods caused by COVID, especially the current factory closures in China due to the country's zero-COVID policy.
There is also the shortage of energy caused by Russia's invasion of Ukraine, and recent underinvestment in fossil fuel fired power generation. The abundance of consumers around the world who are keen to spend extra cash saved up while working from home during lockdowns is another. Over the coming months we can hope to see the first two of these factors reduce, though not the third.
So there will be some further interest rate rises. However, it seems likely that some inflationary influences will be temporary so there should be fewer increases than the alarmists predict.
Central banks must walk a fine line between raising rates to control inflation and avoiding serious damage to economies. If they do that well, we can have rising rates at the same time as a strong economy and sound investment returns.