Christopher Joye: Brace yourself for a higher for longer rates cycle

Brace yourself for a higher for longer rates cycle as the RBA’s ‘hot economy’ experiment goes up in smoke. That’s the view of Coolabah Capital’s Christopher Joye, who says the real risk facing investors is that further expected rate hikes fail to quash inflation that is now entrenched and gaining momentum. The latest inflation data, which saw headline CPI rise to 4.6% in the year to March 2026, has all but locked in another 25 basis point rate hike in May. This would take the official cash rate to 4.35%, with interest rate markets pricing in at least one additional hike for 2026. The tricky part for the RBA is that two of the primary culprits behind Australia’s inflation woes, namely high immigration and government spending, are out of the Central Bank's control. Joye’s view is that politicians lack the resolve required to take sufficient measures to curb these factors. In this interview, Joye explains why he believes a cathartic crisis is required to reset the economy, his views across asset classes and the bear case scenario that could push Australia to recession. Time codes 0:00 - Introduction 0:45 - Australia’s inflation headache 6:00 - The disconnect in risk assets in the face of higher inflation 9:15 - A cathartic crisis is needed to quash inflation 13:33 - Where is the value in fixed-income markets? 19:23 - Australian residential property price outlook 22:05 - The bull, bear and base case for the interest rate outlook