Just as the RBA boss, Dr Phil Lowe, should’ve been readying himself for a pause in his interest rate torture to squeeze inflation out of our economic lives, he has copped a curve ball from the Saudi Arabian leadership and their OPEC+ buddies with oil prices hiked up yesterday.

And from my point of view, it reminds me of the old Shakespearian line that “many a true word is spoken in jest. Only last week a client was wondering about the outlook for interest rates and I said inflation was on the slide and I expected Dr Phil and his board to pause on interest rates. “That slide,” I said, “was helped by the fall in oil prices”. I then joked that after the Saudi royal family copped a big loss in their near 10% holding in Credit Suisse, we could soon see oil prices spike!

Bloomberg says the Saudi National Bank lost $US 1 billion on the demise of Credit Suisse and the takeover by UBS.

The Riyadh-based bank held a 9.9% stake in Credit Suisse, having invested 1.4 billion Swiss francs ($US1.5 billion) in the 167-year-old Swiss lender in November last year, at 3.82 francs per share. And under the rescue deal, UBS buys its rival for 0.76 francs.

Another big loser was the Qatar Investment Authority, which was Credit Suisse’s second-largest investor with a holding of 6.8% of the Swiss bank. Qatar is another oil producer supplying approximately 1,300,000 barrels of crude oil per day, making the country one of the top 15 oil exporting countries in the world.

OPEC+ has most of the oil producers of the world and this group is cutting production by 1.16 million barrels a day. The news sent West Texas Intermediate crude up 6.6%, while Brent crude climbed 6%.

This development is the fly in the ointment or oil that could have Dr Phil wondering if he needs another rate increase but I hope he has the good sense to resist a gut reaction rate rise.

Until this OPEC+ bastardry, which undermines the global handling of recession threats, thanks to high interest rates and the inflation hangover from the pandemic and its lockdowns, economists were warming to the idea of a pause after 10 interest rate hikes from Dr Phil.

The cash rate is now 3.6% and News.com.au reports that “James Algar, from Mortgage Choice, expects the RBA to pause the rate rise.”

AMP’s chief economist, Shane Oliver, thinks a pause is due. “The bigger than expected fall in the February CPI Indicator provides more evidence inflation has peaked and is now slowing,” he tweeted last week. “Along with falling real retail sales, mixed (business) conditions, signs of a slowing jobs (market) and global banking turmoil it supports the case for the RBA to pause next (week).”

The CBA economics team was on board with a pause too but Dr Phil and his board could be influenced by this spike in oil prices to go for one more rise, but that would be a mistake. They’ve done enough with the mortgage cliff looming.

The AFR’s Michael Read tells us that up to 880,000 borrowers will have to find a lot more money to service their home loan soon. That’s why I say that the RBA needs to pause. And these numbers explain why too many interest rate rises could give us a recession.

“Households servicing a $550,000 mortgage – the average size of a loan issued between 2020 and 2022 – will suffer an $891 increase in monthly repayments, with highly indebted households on the hook for an even larger increase. Someone with a $1 million mortgage would have to fork out an extra $1620 each month.

That’s $19,440 a year for a million-dollar borrower and $10,692 for someone with a $550,000 mortgage. And higher petrol prices will add to the recession threat.

Dr Phil has cause to pause and after his no rate rise until 2024 call, he needs a recession on his CV like a hole in the head. And that’s no joke!