Fear and panic is increasing amongst Australians over the rising costs of living. Today, I want to give an interest rate update. Unfortunately, it’s not good news.

More likely, the interest rate hike is going to extend a little bit further with the RBA Governor last month stating that they’re prepared to go up another 25 to 50 basis points this month.

The RBA treasurer also said that inflation could get to 7%, which is a pretty high number.

The way I see it, if they think that inflation is going to go up that high, the Reserve Bank of Australia is going to raise interest rates to try and fight that.

Personally, I don’t think it will work because the core to our inflation is supply issues.

The floods in Queensland pushed vegetable prices massively high. The war in Ukraine has pushed fuel and energy prices very high and is starting to push food prices even higher. The pandemic caused enormous supply issues because it limited us to move goods around the world.

And I think these issues aren’t going to be fixed by decreasing demand, which is what you do if you raise interest rates.

A few months ago, I don’t think rates are going to go up this much or at least this aggressively. But at the end of the day, it’s going to trigger some bad things in the economy.

All these supply issues around the world are already causing a lot of anxiety, but rising interest rates on top of it is just making things a lot worse.

What do we do then?

1. Focus on things that you can control.

With a lot going on that is outside our control, let’s be realistic and just focus on things that you can control.

You can try to monitor your daily spending and identify where you can cut down a bit to help meet expenses without causing too much sacrifice on your lifestyle.

Monitor your food bills. Don’t consume Uber Eats so much, it’s not healthy, both physically and financially anyway. Stay on top of your household expenses.

2. Don’t sell your assets.

People come to me now and ask, “should I sell my house now?”

Consequentially, property prices are going to drop because of the surge in interest rates. But the point is, you shouldn’t sell your assets. It’s called “assets” for a reason.

Even if the economy goes bad, do not get rid of your assets. Instead, get rid of your liabilities.

Summary

We’re living in these weird times, and they’re about to get weirder. They’re about to get harder.

But what I want to say is don’t worry about the outside world. Focus on what you can control first, because that’s going to ultimately end up with you getting through whatever it is we’re about to go through in the coming months.

And remember that you may pick up a wealth of information by engaging with experts. Tailored advice is one cost-effective way to relieve the pressure of rising costs of living.

If you have any questions, I’m happy to be there for you in these trying times.