Economic commentary

August 26, 2025

US Economic Update – 26 August 2025

US Fed – September cut but still see gradual easing

By NAB Group Economics

Key highlights:

  • We expect the first Fed rate cut (of 25bps) will now be in September, as the Fed sees rising downside labour market risks and as it manages political risks.
  • Our broader outlook is little changed. We still expect a total 50bps of cuts by the end of this year, and a further 75bps in 2026. This would leave the target range at 3.00-3.25% – around what the Fed considers neutral.
  • The challenges facing the Fed have not changed – with elevated inflation and (expected) rising unemployment to push the Fed in opposite directions.
  • We still expect a gradual easing cycle as the Fed manages the risk of second-round inflation effects from tariffs and navigates considerable political pressure. Uncertainty around the forecast profile is wider than normal.

Find out more in NAB’s US Economic Update (26 August 2025) (PDF, 198KB), opens in new window

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