Global rates are rising. What should investors expect?
Volatility recently returned to the market as central banks beyond the US indicated an exit from ultra-easy monetary policy. Whilst the recent market turbulence is unsettling for investors, it’s important to stick to a long-term strategy and stay the course.
After all, rising interest rates are a sign of global growth, and as we have seen in the US, interest rates won’t shoot higher overnight. So despite these indications form central banks, rate hikes will be gradual and conditional on stronger economic conditions. The Reserve Bank of Australia (RBA) kept the cash rate on hold at an ultra-low 1.5% in July and indicated no move towards a rate hike just yet.
In this low yielding environment, it is important to consider quality growth assets, such as property and direct or listed infrastructure as a stable source of income for your portfolio.