UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Rate cut speculation'
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Nov 25, 2025 Federal Reserve Governor Waller is pushing for a December rate cut, raising concerns about the labor market and the broader economy. Falling household savings highlight the need for a robust job market to mitigate economic risks. There's speculation about Waller's motives, possibly eyeing a role as Trump's Fed chair. Additionally, insights into US retail sales and producer prices indicate economic health, while German GDP revisions reveal weaker consumption and a need for government support.
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Waller's Rate Cut Signal Risks For Growth
- Paul Donovan highlights that Fed Governor Waller advocated a December rate cut and tied it to labour market weakness.
- If Waller is correct, US growth funded by falling savings is at significant risk because it depends on low unemployment fears.
Rising Prices Backed By Falling Household Savings
- Donovan notes recent US CPI increases were financed by households cutting monthly savings.
- That pattern requires either a firm labour market or at least low fear of unemployment to sustain consumption.
Politics Could Make Markets Ignore Risks
- Donovan warns markets may ignore economic risk if Waller's remarks are seen as courting Trump's Fed chair pick.
- Markets could focus on potential accommodation rather than the risks monetary easing is meant to offset.