The Economy, Stupid But what if the AI bubble doesn’t burst?
Nov 6, 2025
Michael Pascoe, a seasoned finance editor and Reserve Bank observer, teams up with Nikki Hutley, an independent economist and former senior advisor with a focus on climate policy. They delve into the Reserve Bank's pause on rate cuts amidst growing uncertainties and the bubbling AI market. The conversation explores the implications of rising AI investments, potential job disruptions, and the challenges of maintaining economic stability amid inflation. They also discuss historical market bubbles and what future policies may be needed to tackle these evolving dynamics.
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RBA Choosing To Wait
- The RBA paused rate cuts because inflation may stay above their 2.5% central target next year.
- Governor Bullock signalled the board prefers to 'sit pat' and watch how uncertain conditions evolve before cutting rates further.
Penguin Central Banking
- Michael Pascoe likened the RBA to 'emperor penguins' who prefer to sit pat rather than act.
- The bank is prepared to 'look through' a big one-off inflation spike and focus on meeting-by-meeting assessment.
Call For Clearer RBA Communication
- Nikki Hutley praised holding rates but criticised unclear RBA communication and lack of transparency about risks.
- She urged the bank to disclose central path drivers and flag dissent and labour-market concerns openly.