Get ready for a world of more volatile inflation, gyrating interest rates and greater economic uncertainty.Macquarie Group global strategist Viktor ShvetsInvestors, businesses and households need to be prepared for an environment where it is harder to price the real value of money and the cost of capital.
A greater volatility in inflation and interest rates would cause a dilemma for investors and businesses trying to price the cost of capital as they weigh up potential investments.“Suddenly as an investor or a company, you don’t quite know what the risk-free rate is, and you don’t know how to estimate risk premium – you don’t have weighted average cost of capital,” Shvets says.
Investing in new machinery, equipment and technology to make workers more efficient has been the secret sauce to lifting productivity and boosting living standards.Faster productivity growth allows the economy to expand in a non-inflationary way, so people can enjoy higher real incomes.But labour productivity has slumped further, according to national accounts published this week. Shockingly, productivity is back at 2016 levels – an unprecedented decline.
Incoming RBA governor Michele Bullock will be hoping Prime Minister Anthony Albanese and Treasurer Jim Chalmers can revive productivity.Households are feeling the pinch from the interest rate crunch and are pulling back on discretionary spending. Living standards are under the pump asThe shining positive is an ultra-low unemployment rate of 3.7 per cent and people working more hours.
Loans Loans Latest News, Loans Loans Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: abcnews - 🏆 5. / 83 Read more »