Financial markets are betting on people’s lives ‘about to be hell’, says Deloitte partner Chris Richardson

“It is always a clear and present danger for banks that they could find themselves [in the political crosshairs] because they are central to people’s lives,” she said.

After falling into a hole after the Hayne Banking Royal Commission, Ms Bligh – a former Premier of Queensland – said the banks had worked hard to get out and foster a “fragile” positive attitude in the community.

“I think their ability to hold on to this will very much depend on how they treat these people, these families and these businesses who will find the next 12 to 18 months very, very stressful,” she said.

The Reserve Bank of Australia this month raised its benchmark rate by a record 0.1% to 0.35% – the first hike since November 2010 – and signaled that many more rate moves were on the way. .

Financial markets are forecasting a cash rate of 3.2% on the cycle, while economists are forecasting hikes at every RBA meeting in the coming months, but not tipping the same terminal rate as investors.

Mr Richardson echoed National Australia Bank chief executive Ross McEwan that the RBA had a difficult task balancing the risks.

“[If] we are going too hot and too fast, it could lead to recession risk,” he said, but added that if the RBA moves too slowly, it increases the risk of stagflation.

“I’m hopeful that we don’t end up in either of those mistakes,” he said, adding that pricing the market for interest rates would be a mistake.

“I don’t think that’s going to happen. Question: what prevents something stupid from happening? Answer: It’s stupid,” he said.

“Boom Without Profit”

Either way, Alexi Boyd, chief executive of the Council of Small Business Organizations, said rising interest rates, combined with material and labor shortages and large debts accumulated during the pandemic , had left many small business owners “burned out” and considering exiting viable businesses.

While most economists consider the unemployment rate of 3.9%, the lowest in 48 years, to be positive, Ms Boyd said the incredibly tight labor market was “not good news” and put strained companies unable to compete for skills.

“Economists say things are going badly, but small businesses can’t take advantage because they don’t have the workers and supply chain issues limit their ability to grow and innovate,” he said. she stated.

“It’s a contraction, it’s a real concern. We see it in all industries, they can’t take advantage of it. It’s almost like a profitless boom.

“In many cases, these small businesses are completely overwhelmed and may well, out of sheer exhaustion, walk away from strong, viable businesses because they’re just getting to that tipping point.”