NAB Morning Call Divided they cut
Dec 10, 2025
Sally Auld, a markets economist and strategist at NAB, shares her insights on the latest Federal Reserve rate cut and the implications of dissenting opinions within the committee. She discusses the cautious language used by the Fed and the potential end to easing cycles for major global central banks. There’s also talk about Canada’s steady rates, Europe’s improving growth forecasts, and what Australia’s employment data might mean for future RBA decisions. Auld's keen analysis offers a fascinating peek into the complex world of economic policymaking.
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Hawkish Fed Cut Signals Caution
- The Fed delivered a 25bp cut but signalled caution by mentioning the "extent and timing of additional adjustments."
- Markets see this as a hawkish cut and expect only one more cut next year based on the dot plot.
Fed Forecasts Reduce Need For More Easing
- The Fed lifted its growth outlook for 2026 and sees unemployment easing, reducing the need for further cuts.
- The long-run funds rate remains at 3%, implying policy still sits below neutral.
Fed Pauses For Data And Adjusts Reserves Strategy
- Fed will monitor fresh data into January after shutdown-era gaps before deciding additional moves.
- They also plan to purchase short-dated Treasuries to keep reserves ample.