An Associate Professor of Economics at the University of Melbourne and the Immediate Past National President of the Economic Society of Australia, Neville Norman says the negative hype around rising interest rates is wrong. 

“Variable-rate borrowers have had to hand back only one-tenth of the unforeseen bonus they received from the GFC last year and are thus still 90% in front. If normal cash rates reach 5.5%, to which I have for many months predicted they would return to by June next year, then this is the only credible interpretation.

“Instead of grieving for damaged home buyers and business borrowers, the press and financial commentators should be reporting that the rate rise reflects a very positive assessment of our economic destiny, and is already boosting confidence around the world. That’s the underlying story.”

Associate Professor Norman says the interest rate forecasting predictions of economists has so far been wide of the mark.  “In a July economic survey just after the budget, nearly every economist said they could not see a rate rise coming this year.”

“Have my colleagues over-shot, having missed the prospect of a downturn in 2008?”

“We often complain that economists aren’t listened to, but if Australian economists’ reading of the GFC impact on Australia is any guide, perhaps that’s a good thing for the moment!”