Nomura predicts Fed rate cut in September as inflation eases
Nomura now expects the U.S. Federal Reserve to cut interest rates by 25 basis points in September, moving up its forecast after July data showed cooling inflation and early signs of labor market weakness.
The Consumer Price Index rose 0.2% last month, down from June’s 0.3%, while annual inflation came in slightly below expectations. Nomura also lowered its July core PCE estimate to 0.243%, citing softness in areas like prescription drugs and software, News.Az reports, citing Reuters.
The firm anticipates two additional 25-bp cuts — in December 2025 and March 2026 — but sees little chance of a 50-bp move next month, noting that “the labor market is slowing, but there are few signs of stress, and broader financial conditions remain easy.”
Traders are pricing in 60.4 basis points of Fed rate cuts by year-end, with a 94.2% probability of a 25-bp cut in September, according to LSEG and CME FedWatch data. J.P. Morgan, Citigroup, and Wells Fargo also continue to expect a September cut.
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