Stephen Koukoulas
speaker
2,280 appearances
23 recordings
2 series
first heard Apr 2026
last heard 13 Sep
Stephen Koukoulas’s voice in public audio — every appearance, attributed to the second.
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recordings per month · last 12 monthsRecordings per month over the last 12 months — 23 in all, peaking in May 2026 with 6.
Appearances
Yeah.
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Yes, I think that's, in a nutshell, a good summary, because what was happening in the bond market in the US, but also globally to a point, was a concern that central banks weren't hiking to contain inflation.
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Inflation had been stubbornly above the target range.
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And let's just focus on the US again, because that's where the sort of the central point, if you like, of global bond market yields are sort of sourced from.
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The fact that inflation had been so high for so long, I think it's now five years plus since the Fed has met its inflation target, with inflation moving higher yet still, it had been three years since we'd had a Fed interest rate hike,
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And we'd also had the ongoing, what do we call it, ructions in Iran and with the oil prices still at about $100 a barrel plus plus, that the market wanted to see, if you like, the Fed coming out, putting aside the rhetoric of Donald Trump and saying, look, we are fair dinkum about containing inflation and that means we're going to hike interest rates.
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without fear or favour, and to sort of use that higher interest rate setting to cool the US economy down.
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And with that, rebuild our inflation credibility, which had been sort of pretty fragile in the last six months, it must be said.
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If central banks take their eye off maintaining their inflation credibility, you get what we call capital market dislocation.
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And that's a sort of over-encompassing sort of phrase for a lack of concern in the banking sector about who they lend to and who's creditworthy.
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Because if the US government isn't
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credible, the Fed's not credible.
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Well, who's to say company XYZ when they need to tap the capital markets?
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And of course, the other thing in recent months has been the AI and AI-related companies borrowing lots of money to fund their expansion.
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So they're sort of
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at the cusp of this uncertainty about Fed economic policy, monetary policy.
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So you get this lack of confidence in the economy.
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Consumers and businesses react to that by thinking, gee, inflation, instead of hanging around 2%, 2.5%, it's going to be 4%, 4.5%.
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That filters into their behavior, their investment decisions, and you have an economy that massively underperforms potential.
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So in a sense, rate hikes, not too many people like them, but they're sort of the tough medicine, the tough love that central banks do deliver when inflation is running way too high for their target.
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