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.”
