What's Happening?
Nomura has forecasted a 25 basis points interest rate cut by the U.S. Federal Reserve in September, citing signs of milder inflation and early signs of labor market stress. The Consumer Price Index rose by 0.2% in July, easing from June's 0.3% increase, aligning with economists' expectations. Nomura anticipates two additional 25-bp reductions in December 2025 and March next year, but considers a 50-bp cut unlikely due to the current labor market conditions and overall financial stability.
Why It's Important?
The expectation of a rate cut reflects broader economic trends, including cooling inflation and labor market dynamics. A rate cut could lower borrowing costs, potentially stimulating economic activity and benefiting sectors reliant on consumer spending and investment. However, the decision will depend on ongoing assessments of economic indicators, including inflation and employment data. The stance of other major brokerages, such as J.P.Morgan and Citigroup, aligns with Nomura's prediction, indicating a consensus among financial experts.
