High prices and interest rates: expert advice on managing your money
Careful budgeting, managing borrowing costs, protecting cash reserves and limiting financial risks: experts tell Euronews how households and businesses can cope with inflation and high interest rates.
Should we go ahead with a major purchase or wait it out? Is now the right time to start a business? What will happen to interest rates, and how much further can the cost of living rise?
For millions of Europeans, these decisions have become harder. The surge in the cost of living, swings in energy prices, and higher borrowing costs are creating an environment where planning even a few months ahead feels complicated.
The problem is not only that prices have gone up. It is also that consumers are struggling to gauge what will happen next.
Euronews spoke to financial risk management experts about the options facing consumers and businesses at the sixth HAT International Treasury Summit in Athens, organised by the Hellenic Association of Treasurers.
Should we wait or move ahead?
Janet Legge, deputy chief executive of the UK-based Association of Corporate Treasurers, which represents professionals who manage businesses’ money and financial risks, believes that caution is justified when international developments remain so unpredictable.
Asked what she would advise someone considering starting a business or making a major purchase, she said: “I think we need to watch developments for a while and be somewhat cautious at the moment.”
For a household, putting this approach into practice starts with a few basic questions.
How essential is this particular expense? Can it be covered without exhausting available savings? Will it require borrowing and, if so, what share of income will the repayments represent? And what happens if income temporarily falls or some essential costs rise?
Interest rates: why forecasts remain difficult
The path of interest rates is one of the key sources of uncertainty, especially for those who have loans or are considering taking on new debt.
Speaking about the UK, Legge noted that interest rates were expected to ease, but the experience of recent years shows how easily forecasts can be overturned.
“In recent years we keep hearing that interest rates are about to fall and then they go back up again,” she said.
In her view, volatility is likely to be a feature of the new normal.
“They will go up and down, and we will have to adapt,” she said.
For borrowers, the key question is how their own contract is affected: whether the interest rate is fixed or variable, when it is adjusted and how much the monthly repayment can change.
