Near zero interest rates are closer than you think.

Got a question? Reach out to the team via our website https://moneyonthemic.com/#contactfundd Follow us on Socials: @moneyonthemicpodcast on Instagram and TikTok In this episode, Darren and Brodie unpack a recent Australian Financial Review piece arguing that near-zero interest rates may be closer than most Australian commentary acknowledges. The argument sits across four structural forces: inflation was temporary rather than structural, the real economy is slowing, AI is deflationary at scale, and governments carrying record debt cannot sustain high rates. Read the article here: https://www.afr.com/chanticleer/near-... THE BREAKDOWN The inflation surge of 2022 to 2024 was caused by an unusual combination of one-off events. COVID supply chain disruption, unprecedented government stimulus, labour shortages, the war in Ukraine, and the more recent conflict in Iran all pushed prices higher through supply-side and cost-push channels. None of those forces are structural. As each fades, the underlying inflation dynamic reverts closer to trend. The real Australian economy is already slowing. GDP growth over the most recent quarter registered below 1%, well under headline inflation. On an inflation-adjusted basis, the economy is contracting. Aging population dynamics compound the effect. AI is structurally deflationary. Rather than replacing entire jobs, AI is replacing tasks within jobs. That reduces wage growth, lowers business costs, and increases competition on price across most service sectors. The current inflationary drag from AI comes from energy demand, but that constraint is likely to resolve as energy generation catches up. Governments across the developed world are drowning in debt. The Australian federal debt trajectory is forecast to continue expanding through the next five years. High interest rates make the debt service cost unsustainable. Governments that cannot pay their debt-service bill will not tolerate rates at current levels for long. The episode lands on a specific forecast: the Australian cash rate is likely to sit somewhere between 2 and 3% by 2030, down from the current 4.35%. Mortgage rates would follow, implying a return to the 4 to 5% range for owner-occupier home loans. 00:00 Intro: Near Zero Interest Rates 01:00 Why The AFR Article Is Worth Taking Seriously 03:00 Why Inflation Was Temporary Rather Than Structural 08:00 The Real Australian Economy Is Slowing 14:00 Why AI Is Structurally Deflationary 19:00 Why Governments Can't Sustain High Rates 23:00 The 2030 Cash Rate Prediction 27:00 What This Means For Australian Property 30:00 Wrap This podcast provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. All information is correct at the time of filming. CREDITS Quick Mouse Clicks by Cpfcfan10 https://freesound.org/s/635074/ Attribution 4.0 Hole Punching a Paper.wav by ryanharding95 https://freesound.org/s/272449/ Creative Commons 0 The story you're about to hear... (music) by xkeril https://freesound.org/s/639585/ Attribution 4.0 Rapid Laptop Keyboard Typing Click by brktkrgll https://freesound.org/s/856166/ Creative Commons 0