Rate cut off the table for UniSuper

There is “no chance” of a cut by the Reserve Bank of Australia next week, according to UniSuper’s head of fixed interest David Colosimo.

Speaking on UniSuper’s investment podcast, Colosimo discussed the meeting of the monetary policy board set to take place on 8-9 December. This has been hastened by the news that monthly CPI print last week showed inflation rose 1.3 per cent in the September 2025 quarter and 3.2 per cent annually.

Echoing comments by State Street Investment Managers and HSBC economists, he was doubtful of the RBA’s willingness to cut rates for a fourth time in one year.

“We've seen three cuts this year, but recent data has showed stronger inflation, a labour market that's [still] quite tight, and we do get GDP data this Wednesday [3 December], and that's expected to show that activity in Australia is recovering.  

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“I don't see any chance of a cut this month, and actually, we've probably seen the end of the cutting cycle here already. If anything, financial markets are now starting to speculate whether the RBA will actually flip back towards rate hikes again next year.”

Meanwhile, he believes the sustainability of government finances in Japan will be the biggest catalyst in 2026, especially in Japan which recently announced a fiscal stimulus package of ¥21 trillion ($206 billion).

This was the largest stimulus package since COVID-19 and is intended to cushion households from high inflation – which stood at 3 per cent in October– and spur economic growth,

Colosimo said: “Japan is probably the best example. Prime Minister Sanae Takaichi announced a big fiscal stimulus this month—¥21 trillion, mostly on price relief, like subsidies for electricity and gas (and cutting gasoline taxes as well), raising defence spending."

“It's a boost in the near term, but as inflation is increased in Japan, it does come at a cost. Japan is already the most indebted country in the world.

"It doesn't matter so much when interest rates were close to zero—it's really easy to pay that interest bill—but bond yields are now starting to increase quite sharply, and the market might really start to question how it's going to pay for all that debt at higher interest rates. Japan, of course, is not alone.  

“Governments all over the world continue to run sizeable deficits, and it just remains to be seen how much of a problem that could be.”