HSBC Global Viewpoint The Macro Brief – US rate cuts & spending gluts
Sep 12, 2025
Ryan Wang, a US economist, analyzes the Federal Reserve's potential interest rate cuts as they approach their September meeting. He discusses the implications of a looming $2 trillion US deficit and how recent fiscal policies are shaping the economic landscape. The conversation touches on the delicate balance between managing inflation and supporting employment, alongside insights on the Federal Reserve's leadership and their strategic direction. Wang also highlights diverse viewpoints among policymakers regarding monetary adjustments and global macroeconomic themes.
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September 25bp Cut Widely Expected
- HSBC expects a 25bp Fed rate cut at the September meeting as policymakers coalesce around a modest easing step.
- Risks remain in both directions because inflation stays elevated while job-side data show increasing downside risks.
Markets Price Faster Cuts Than Fed
- Markets are pricing consecutive cuts across September, October and December after softer recent jobs reports.
- HSBC sees a risk markets get more aggressive on cuts than the Fed's likely gradual path.
Dual Mandate Creates Gradual Cut Path
- The Fed faces a mandate tension: inflation remains near 3% while labour-market signs are softening.
- HSBC therefore forecasts gradual cuts: September, December, then March next year, rather than rapid easing.