AI and data centre spending forcing interest rates higher for longer
AI and data centre investment is pushing neutral interest rates higher, so mortgages will stay expensive.
Christopher Kent, the RBA's assistant governor, said there is reasonable evidence that neutral interest rates are rising in Australia and abroad. AI and data centre companies are competing hard for global capital, which is pushing these rates up.
The cash rate is now 4.6 per cent, the highest in 15 years. Markets expect rates to stay above 4.5 per cent until at least mid-2028 - the longest such period since before the 2008 financial crisis.
Higher spending by governments and AI companies makes interest rate cuts less effective at slowing demand. The RBA must keep rates higher to do its job.
- 4.6 per cent
- Current cash rate
- 15 years
- Years since this high
- Above 4.5 per cent until mid-2028
- Expected rate floor
- Christopher Kent, assistant governor
- RBA official
Why it mattersAustralian mortgage holders face years of elevated rates as global competition for capital shifts economic fundamentals higher.
AustraliaAustralian mortgage holders should expect interest rates to remain at or near current levels through 2028, affecting household budgets and home loan repayments.
✓ Claims checked against the source. checked 3 h ago
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