When Interest Rates Rise, So Does Psychological Load
- Tenneile Manenti
- Feb 4
- 4 min read
Why this is showing up everywhere—from decision fatigue to retail aggression
We often talk about interest rate hikes as if they’re tidy, technical adjustments—numbers nudged up or down to stabilise an economy.
But in real life, they don’t land as numbers.
They land as longer hours. Harder conversations. Tighter margins. Shorter tempers.And a quiet, cumulative psychological load that spreads through workplaces, homes, roads, and frontline services.
This is not just an economic shift.
It’s a nervous-system event.
Financial pressure as a threat signal
From a neuroscience perspective, financial strain is one of the most potent stressors we know. It’s uncertain, largely uncontrollable, and persistent—the exact conditions that activate the brain’s threat system.
When people are under ongoing financial pressure, cortisol stays elevated. Over time, that has very real cognitive consequences. Chronic cortisol exposure impairs prefrontal cortex functioning—the part of the brain responsible for working memory, attentional control, emotional regulation, and cognitive flexibility. In simple terms, people become more reactive, more rigid, and less able to think clearly under pressure.
Research shows that sustained stress shifts people away from goal-directed decision making and into more habitual, defensive patterns of behaviour. Financial decision-making changes too: people tend to become more risk-averse, more short-term in their thinking, and more sensitive to perceived losses. As stress persists, error rates increase and the ability to integrate complex information drops away.
This maps cleanly onto what many workplaces are seeing right now:more mistakes, more reactivity, more misunderstandings—and less capacity for nuance or perspective.
Fatigue, cognitive load, and why tempers are shorter
To manage rising costs, many people are compensating in the only ways available to them: longer hours, overtime, second jobs, fewer breaks, less sleep.
The cognitive costs of this are well established. Mental fatigue and sleep restriction impair sustained attention, working memory, and executive control. In high-load environments, that translates into more near misses, more safety incidents, and slower reaction times.
But there’s another layer that matters just as much.
Prolonged stress narrows attention toward perceived threats and immediate demands. That leaves fewer cognitive resources for empathy, perspective-taking, and conflict de-escalation. When people are already operating close to capacity, even minor frustrations can trigger disproportionate emotional responses—not because people are becoming “worse”, but because regulatory capacity is depleted.
This helps explain why tension is rising not just at work, but on the roads, in shops, and in everyday interactions. When the system is already overloaded, there’s very little buffer left.
Effort up, reward flat: a classic burnout pathway
One of the quieter stressors emerging right now is what occupational health research calls effort–reward imbalance.
As interest rates rise, many employees are working harder simply to stand still financially. More responsibility. More hours. More emotional labour. But pay, job security, and recognition are often flat—or declining in real terms.
The Effort–Reward Imbalance (ERI) model predicts exactly what follows: sustained stress, emotional exhaustion, cynicism, and disengagement. Large reviews show that when people invest high effort without adequate reward—whether financial, relational, or symbolic—the strain becomes chronic rather than acute.
Crucially, ERI research also notes that people often cannot leave these situations due to financial constraints and labour market conditions. The result isn’t a crisis moment—it’s a constant background load. People keep functioning, but at a cost.
This is the “doing more with less” fatigue many leaders are sensing but struggling to name.
Frontline workers and the sharp edge of stress
Nowhere is this compounding pressure more visible than in retail and frontline roles.
As cost-of-living pressure increases, so does customer frustration—and too often that frustration is directed at workers with no control over pricing, policies, or business decisions. Australian data shows a sharp rise in verbal aggression and physical violence toward retail and service workers, with occupational violence claims increasing significantly over recent years.
From a psychosocial safety perspective, this matters deeply.
Frontline workers are absorbing the emotional spill-over of systemic stress. Prolonged exposure to aggression—especially when it feels unfair or uncontrollable—drives emotional exhaustion, moral injury, absenteeism, and turnover. This is not a customer-service issue. It is a psychosocial hazard with real health, safety, and legal implications for organisations.
When recovery disappears, coping turns into surviving
Under financial strain, recovery is often the first thing sacrificed. Sleep, exercise, social connection, therapy, time off—anything perceived as “non-essential” gets trimmed.
Neuroscience tells us this is exactly the opposite of what the system needs.
Recovery is the primary mechanism through which cortisol and autonomic arousal return toward baseline. When demands remain high and recovery drops away, stress becomes chronic. Mood lowers. Fatigue deepens. Relationships strain. Resilience to everyday stressors erodes.
This is how people move quietly from coping into surviving—still showing up, still functioning, but with very little left in reserve.
Why this is a leadership and business issue
From an organisational perspective, this moment carries real risk.
Stress-induced changes in cognition undermine decision-making quality precisely when uncertainty is high and sound judgement is most needed. Fatigue increases errors and safety incidents. Effort–reward imbalance fuels burnout and disengagement. Exposure to customer aggression escalates psychosocial risk.
Contemporary psychosocial risk frameworks are clear: unmanaged chronic stressors—rising workloads, prolonged fatigue, aggression, and lack of recovery—don’t disappear. They show up downstream as claims, conflict, turnover, and psychological injury.
This is why proactive, defensible psychosocial risk management matters more now—not as a compliance exercise, but as a stabilising force in volatile conditions.
A grounded invitation for support
If you’re an individual feeling the weight of this—working longer, worrying more, running on empty—I offer confidential, evidence-based telehealth psychology support for people under sustained pressure. You don’t need to be in crisis to reach out. Support can be preventative, not just reparative.
If you’re a leader or business owner noticing rising fatigue, tension, or vulnerability in your workforce, I work with organisations to:
Identify and manage psychosocial risks proactively
Support teams exposed to customer aggression and chronic stress
Equip leaders to hold pressure without absorbing it
Reduce the downstream cost of burnout, errors, and psychological injury
Interest rates may be outside our control.
How we respond to their human impact is not.
This article forms part of the Brain, Bias and Bank Accounts series—insights that explore how our brains respond to money, uncertainty, and risk, and how financial pressure quietly shapes decision-making, behaviour, and wellbeing at work and in life.
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