Tuesday 24 February 2026 5:25 am  |  Updated:  Monday 23 February 2026 5:26 pm

The era of cheap money is coming to an end – markets aren’t ready

By: Damian Pudner

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The era of historically cheap money is ending, forcing a potentially permanent adjustment to higher equilibrium interest rates that will challenge financial markets and government finances built on past assumptions, says Damian Pudner

For almost a decade until the pandemic, financial markets priced money as if it would remain cheap indefinitely. Governments borrowed freely, financial assets soared in value, and abundant credit became a structural feature of the economic landscape.

That assumption now looks increasingly fragile.

The question confronting investors is no longer simply where interest rates will settle through the cycle. It is whether the underlying price of money has shifted onto a higher trajectory. If it has, the implications extend well beyond central banks into sovereign debt dynamics, financial stability and the valuation framework underpinning financial markets.

Cheap money shaped behaviour across the entire financial system. Its withdrawal will do the same.

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