National Australia Bank expects the U.S. Federal Reserve to deliver its first 25bp rate cut in September, citing mounting labour market risks and heightened political considerations.
In a research note, NAB said its broader outlook remains largely unchanged,
- forecasting a total of 50bps in cuts this year
- and a further 75bps in 2026.
- That would bring the Fed funds target range down to 3.00–3.25%, roughly in line with policymakers’ estimate of neutral.
The bank stressed that the Fed continues to face conflicting pressures:
- elevated inflation on one side
- and a likely rise in unemployment on the other.
It expects a gradual easing cycle as the Fed works to limit the risk of second-round tariff-driven inflation effects while navigating political headwinds in an election year. NAB added that the degree of uncertainty around the rate path is “wider than normal.”
This article was written by Eamonn Sheridan at investinglive.com.