The only benefit of the current crop of scary bad banking headlines (if you can rule out the anxiety it creates for money-worriers) is that it will make Jerome Powell of the US central bank and our own Dr Phil Lowe think twice before they raise interest rates.

Believe it or not, the failure of second rate excessively optimistic business owners and companies, as well as big borrowing consumers, is what killing inflation by hikes in rates is actually all about. Of course, Treasurers and central bank bosses never say this but it's the truth.

The economic casualties of fast rising rates become the fodder for chilling headlines that tend to exaggerate how big the threat is to ordinary people. But the current fear and loathing won’t only hold back central banks’ commitment to rate rises, it will stop spenders spending and employers employing and paying higher wages. So collectively it will speed up the reduction in inflation.

I can image Jerome and Dr Phil looking at the current bank carnage and its created headlines and jumping for joy like that unlikeable baby Stuwie in Family Guy, who regularly exclaims: “Victory is mine!”

Adding credibility to my argument that rate rise time should be over ASAP are the latest confidence number readings, which the data-watching Dr Phil really shouldn’t ignore easily.

CreditorWatch chief economist Anneke Thompson summed up the terror that rate rises have imposed on consumers and business: “Two popular measures of consumer sentiment and business confidence were released today, with both pointing to bleaker measures of confidence in the outlook.  “Westpac Consumer confidence remains at near recessionary levels, while NABs Business Confidence survey fell below the long run average, and is at its lowest level since November 2022”.

This comes hot on the heels of other negative readings that should be compatible with the belief that inflation is on the slide. Have a look at these:

1. New lending for housing fell by a larger‑than‑expected 5.3% a month in January. This marks the twelfth consecutive monthly decline. Further falls are likely in the near term.
2. Building approvals for private detached houses fell by 13.8% a month, taking the level of new housing approvals to its lowest point since 2012. Approvals for private multi‑unit dwellings fell by 40.8% a month and CommSec’s Craig James said: “The RBA’s rapid tightening is having a significant impact on the Australian residential construction sector.”
3. GDP rose less than expected in the December quarter, up 0.5% and up 2.7% for the year, with business investment and dwelling construction contracting over the quarter.

The CBA economics team is warning that if the RBA sticks to the expected two more rate rises, it “…makes the ‘soft landing’ increasingly hard without monetary policy easing later this year.”

Australia and the USA don’t need a hard landing into a problematic recession, so let’s hope these bad bank failures result in central banks giving up on their potentially ruinous rate-rising behaviour.

This would be great news for overborrowed borrowers!