FEAR & GREED | Business News Q+A: The Week Ahead | 1 Dec 2025
Nov 30, 2025
Economist Stephen Koukoulas, known as 'The Kook', shares insights on a pivotal week for the economy. He discusses the shocking rise in inflation and its implications for interest rates, arguing that rate cuts are off the table. Stephen also highlights a significant boost in business investment, pointing to its critical role in productivity. As he predicts strong GDP growth, he warns about potential risks from imported capital spending and the impact of cost-of-living pressures on household spending.
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Inflation Surprise Driven By Administered Prices
- Monthly inflation surprised on the upside and pushed rates expectations higher.
- Administered price moves (electricity, excise) drove much of the jump but market prices also showed rising momentum.
Policy Changes Inflate Headline Numbers
- Administered prices are set by policy and explained much of the headline rise, such as electricity subsidy unwinding.
- Policy-driven price moves may not be easily controlled by monetary policy but still affect inflation statistics and RBA decisions.
Rate Cuts Off The Table For Now
- The inflation jump removes scope for near-term interest rate cuts and raises the risk of further tightening if momentum continues.
- Koukoulas sees rates remaining on hold for a long time given weak labour momentum and the RBA's dual mandate.