NAB Morning Call Fed’s risk management cut
Sep 17, 2025
Ken Crompton, an economist from NAB Markets Research, dives into the recent rate cut by the Fed and its implications for the markets. He discusses Jerome Powell's cautious yet strategic approach amid rising inflation and potential labor market weaknesses. The conversation also touches on the Bank of Canada's rate cut, the anticipation surrounding the Bank of England's decisions, and what upcoming Australian employment data might mean for the RBA. Crompton's insights shed light on the dynamics of global central banking.
AI Snips
Chapters
Transcript
Episode notes
Fed's Mixed Signal On Cuts And Inflation
- The Fed cut 25bps while raising inflation forecasts and pencilling in more cuts this year via the dot plot.
- That blend signalled short-term accommodation but a still-elevated long-run rate, surprising markets slightly.
Dots Plot Show Short-Term Dovishness, Long-Run Caution
- The median dot moved to three cuts this year, reflecting an unexpectedly dovish near-term stance.
- The long-run dot stayed around three, keeping terminal rate expectations higher than market priced.
Fed Framing: Low Hiring, Low Firing Risk
- Powell reframed the balance of risks toward the labour market, citing low hiring and low firing dynamics.
- The cut was described as risk management rather than an aggressive easing turn.