I want to talk about interest rates today. Not in a textbook way. In a real way.

As a swing trader, I need to have at least a rough idea of what people are feeling. I trade crowd psychology. I follow the money, and the money follows the mood.

Are people excited? Are they spending freely? Are they the kind of confident where they’re skipping down to B&Q on a Saturday to price up a new kitchen? Or are they scared? Are they keeping the car on the drive, cancelling the holiday, sitting tight and hoping nothing gets worse?

Because that mood — that collective feeling — is what moves markets. Not spreadsheets. Not Fed statements. Real people making real decisions about whether to spend or save, whether to invest or sit on cash, whether to take a risk or batten down the hatches.

That’s why consumer confidence data matters to me. It’s not perfect. It’s a survey. People don’t always do what they say they’ll do. But it gives me a read on the crowd. And right now, the crowd is telling me something pretty clear.

I’ve been reading the news, watching the data come in, and I don’t have an economics degree. I’m not a professional analyst. But something about the current debate doesn’t sit right with me. And the more I dig into it, the more I think some very qualified people might be about to make a very expensive mistake.

Let me walk you through everything that’s going on, why it matters to you personally, and where I stand on it.

First — What Are Interest Rates Actually For?

Before we get into the debate, let’s make sure we’re clear on what interest rates do. Because most people know rates go up and down, but fewer people know why — and the reason is more brutal than you’d expect.

The above sounds harsh, but it’s the honest version. Higher rates make your mortgage more expensive. Your car loan costs more. Your credit card charges more. Business loans get more expensive, so companies stop expanding and start laying people off. The idea is to drain money out of the economy, slow spending down, and bring prices back under control.

In other words, when inflation rises, the central bank’s answer is to make people feel it in their wallets. Sometimes to the point of losing their job.

That’s the mechanism. And when it’s applied in the right situation, it works. The question I keep coming back to is — is this the right situation?

How We Got Here — The Covid Comparison

To understand where we are now, you have to go back to COVID.

When the world shut down in 2020, governments panicked. They pumped billions into people’s bank accounts. Furlough schemes. Stimulus cheques. Grants. The logic was simple — if people can’t work, we need to keep them afloat.

And it worked, in the short term. People had money. More money than usual. Then, when the world opened back up, everyone went out and spent it at the same time. Restaurants were rammed. Holidays were booked. People bought cars, TVs, furniture. All at once. And the supply chains that had been sitting idle for two years couldn’t keep up. Not enough goods, not enough workers, too much money chasing too few things.

That’s what caused the post-COVID inflation wave. Too much money, too much spending, not enough supply. And raising interest rates made perfect sense for that situation. The goal was literally to drain that excess cash out of the economy. Making people spend less. Cooling the economy down.

It was painful. But it was targeting the right thing.

Here’s the problem. That money is gone now.

Most of those COVID savings sitting in the bank are not there anymore. Those buffers have been eaten up by three years of elevated prices. The economy was already showing signs of strain before this war started. The Fed had already cut rates three times in late 2025 — not because everything was great, but because the labour market was weakening. They were already moving to support the economy, not cool it down.

And then the war started. Oil spiked. And suddenly, people are pricing in rate hikes again.

What’s Actually Causing Inflation Right Now

This is where I think the debate gets muddled. Because not all inflation is the same.

The post-COVID inflation was demand-driven. Too much spending. You fix that by slowing spending down. Raising rates works.

What we have now is supply-driven. Oil prices are spiking because the Strait of Hormuz is blocked. Think about what that means in practice. Everything runs on oil. Every lorry delivers your shopping. Every plane is flying cargo. Every ship moves goods across the world. When oil spikes, their costs go up. And when their costs go up, yours do too. Your food, your energy bills, your fuel — all of it gets more expensive.

That’s not because people are spending recklessly. That’s because a war has disrupted the global energy supply.

So here’s the question I keep asking: Does raising interest rates fix that?

Raising rates doesn’t produce more oil. It doesn’t reopen the Strait of Hormuz. It doesn’t bring the price at the pump back down. What it does is make your mortgage go up — on top of your petrol already going up, your food already going up, your energy bills already going up. On top of a labour market that was already weakening.

To me, that’s not fighting inflation. That’s piling on.

Today’s Data — And What It’s Telling Us

If you haven’t come across JOLTS before, here’s what it is. Every month, the Bureau of Labour Statistics surveys employers across the US and counts how many job vacancies exist, how many people were hired, how many quit, and how many were laid off. It stands for Job Openings and Labour Turnover Survey. It’s one of the best real-time snapshots of labour market health we have — because it shows not just how many jobs exist, but how people are actually behaving inside the job market.

Today’s reading came in at 6.882 million job openings for February. The market was expecting 6.92 million. A miss! January had spiked up to around 7.2 million — February gave most of that back. The broader trend over the past year has been flat to slightly declining. No recovery. No momentum.

But the number that really caught my eye was the quit rates

The number of people voluntarily quitting their jobs fell to 2.974 million — the lowest since August 2020. During COVID.

They’re clinging to what they’ve got because they don’t trust what’s out there. That’s not a sign of a healthy economy. That’s a workforce that’s starting to feel genuinely uncertain about the future.

Consumer Confidence — March 2026: 91.8

Today we also got the Conference Board Consumer Confidence reading for March — 91.8, up slightly from last month, and it actually beat forecasts of 87.8. On the surface, that looks fine.

But dig one layer deeper and it gets more interesting. The index has two components. How people feel about things right now — that went up. How people feel about the next six months — that went down. The expectations component fell to 70.9. Historically, anything below 80 on that measure has been associated with recession.

The spending data inside the survey backs this up. People are cutting back on holidays. Cancelling travel. Moving money towards utilities and healthcare — the stuff they have no choice about — and away from restaurants, hotels, big purchases. The Conference Board described it as consumers shifting towards cheap thrills and necessary services.

That’s not a confident consumer. That’s a consumer bracing for impact.

And the University of Michigan’s separate sentiment survey told an even starker story — falling to 53.3 in March, near record lows. Year-ahead inflation expectations are rising to 3.8%. People expect prices to keep going up. And they’re pulling back as a result.

Here’s what’s important: if people are already pulling back on spending, and oil is simultaneously making everything more expensive, you don’t get normal inflation. You get something worse.

The Two Scenarios Worth Understanding

Scenario 1 — Stagflation

Stagflation is the word nobody wants to say out loud right now. It means a stagnating economy with rising inflation at the same time. Slow growth, rising prices, weakening jobs market. All happening together.

It’s the worst scenario for central banks because there’s no clean answer. You can’t cut rates to support growth because that fans the inflation. You can’t hike rates to fight inflation because that crushes the already weak economy. You’re stuck.

We’re not there yet. But the ingredients are assembling. Weakening labour market. Oil-driven inflation. Consumers are already pulling back. Confidence is starting to crack.

Scenario 2 — The War Ends, Everything Reverses

The bull case is straightforward. A deal gets done. The Strait reopens. Oil falls back toward $80 ish. Energy prices cool. The Fed cuts again. Markets rally hard. Goldman Sachs is still treating this as a short-term shock. Some inside the Fed still think it’ll pass. If they’re right, none of this becomes a crisis — just a rough few months.

The problem is nobody knows. And that uncertainty is itself damaging.

The 1970s — The Historical Warning

If you want to understand why some people are arguing for rate hikes despite everything I’ve said, you have to go back to the 1970s. Because that’s what central bankers have nightmares about.

In the 1970s, there were two major oil shocks. OPEC cut supply, prices spiked, and inflation surged. The Federal Reserve made what is now considered one of the biggest policy mistakes in modern economic history. They looked at the oil-driven inflation, decided it was temporary, and didn’t act aggressively enough. Inflation became embedded. Workers demanded higher wages because they expected prices to keep rising. Businesses raised prices because they expected costs to keep rising. It became self-reinforcing.

By the late 1970s, inflation in the US was running above 13%. It took Paul Volcker hiking rates all the way to 20% and deliberately triggering a brutal recession to finally kill it. Unemployment hit nearly 11%. It was economically devastating.

That’s the ghost that haunts every central banker when oil spikes. The fear of being the person who waited too long.

But here’s where 2026 is different from the 1970s.

In the 1970s, there was no covid hangover. No stimulus drain. People weren’t already stretched. The economy wasn’t already softening before the shock hit. The Fed wasn’t already cutting rates to support a weakening labour market.

And crucially, people still had spending power. The inflation back then had real demand components alongside the supply shock. Raising rates could slow things down because there was genuine spending to slow.

Right now? The spending slowdown is already happening on its own. Consumers are already pulling back. Job confidence is already falling. The quits rate is at COVID-era lows.

You don’t need to force a slowdown when the slowdown is already arriving.

The Case For Hiking — To Be Fair

I want to be balanced here, because smart people disagree with my position. And they have real arguments.

The argument for hiking goes like this: inflation expectations are the real danger. If people start believing inflation is going to keep rising, they’ll demand higher wages and accept higher prices — and it becomes a self-fulfilling cycle, exactly like the 1970s. Hiking rates are partly a signal. It says: we are serious, we will act, do not start pricing in permanent inflation. It’s as much psychological as it is economic.

There’s also the argument that inflation was never fully beaten. Before the war, it was still running at 2.9% — above the 2% target, for the fifth consecutive year. Some economists argue the Fed cut too early in late 2025 and was already behind the curve before oil hit.

And if the war drags on for six, nine, twelve months — the ‘it’s temporary’ argument collapses. At some point, a supply shock that lasts long enough stops being temporary and becomes the new reality.

These are real arguments. I’m not dismissing them.

Where I Stand

As I said above, I am not an economist. But sometimes not having the technical training means you can see something plainly that gets lost in the models.

The inflation we’re dealing with is being caused by oil. By a war. By a supply shock. Not by people spending too much money they don’t have.

Raising interest rates does not fix a supply shock. It doesn’t make oil cheaper. It doesn’t end the war. What it does is add financial pressure to people who are already squeezed — on top of rising petrol, food, energy bills — at a time when the labour market is already weakening and consumers are already pulling back.

The COVID comparison matters. Last time, people had excess savings to drain. Rates worked because there was spending to slow. That money is gone. There’s no buffer.

Today’s quits data told me everything I needed to know. People aren’t confident enough to leave their jobs. That’s not an overheating economy. That’s an economy already on the back foot.

Hiking rates into that isn’t fighting inflation. It’s potentially tipping a wobbly economy into something much worse.

My view: cuts make more sense. Support the labour market. Don’t add to the squeeze. And hope the war ends faster than anyone expects.

But I’ll be honest — the one thing that changes my mind is time. If this war is still going on in six months and oil is still above $100, the calculus shifts. At that point, temporary stops being a reasonable word for it.

For now, though? I’ll take the cut side of this argument every single day.