Why relief from high interest rates might be some way off

, warns central bankers, investors and households from declaring victory just yet.

Danieli also warns that the peak in interest rates will not mean the end of rate pain. The investor, who oversees about $2.5 billion in fixed-income assets, says the history of RBA rate-raising cycles over the past 40-odd years suggests interest rates will remain at their cycle peak for between six and 12 months.

The best result, he argues, would be a more moderate outcome, with shocks in some parts of the economy, but no systematic damage. “And that’s going to be the real tightrope to walk,” he says.The scenario Danieli paints underscores just how difficult a task Lowe’s successor faces. Inflation cooling too quickly would suggest a hard landing that would bring faster rate cuts, but deeper economic pain.

There are very attractive opportunities to be found in such an environment, but he’s wary of suggestions that this is a time for credit investors to move towards fixed-rate products when further rate increases look likely in the coming months.

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