The Fed's first cut is the deepest

Just briefly in today’s #5in5withANZ podcast below:

The Fed cuts by a super-sized 50 basis points and signals a total of 200 basis points of cuts by the end of 2025. Indonesia also cuts rates. The RBA will be watching Australian jobs data today. NZ’s GDP data is expected to show a contraction.

5 things to know in 5 minutes:

1. The Federal Open Markets Committee has just cut its benchmark rate by 50 basis points to a target range of 4.75%-5%. ANZ Head of G3 Economics Brian Martin says the move is underwriting the outlook for a soft landing in the US.
2. Projections show another 50 basis points of cuts in 2024, a further 100 basis points in 2025, and a further 50 points in 2026. Brian says that suggests the Fed believes ‘neutrality’ for US rates is between 2.75% and 3%.
3. Bank Indonesia yesterday cut its official rate by 25 basis points to 6%, ahead of the Fed’s move. ANZ Economist Krystal Tan says BI looks set to cut again before year-end.
4. New Zealand Q2 GDP data today is expected to show a contraction. ANZ Economist Henry Russell forecasts a 0.1% drop, while the RBNZ is forecasting a 0.5% fall.
5. ANZ Senior Economist Catherine Birch expects Australia’s unemployment rate to fall a touch to 4.1% in data out today due to a lower participation rate. The data comes a week after the RBA warned it was surprised the labour market hadn’t been weakening as expected.

In our bonus deep dive interview:

ANZ Institutional’s Head of Geopolitical Risk Cameron Mitchell reviews the rise of tariffs as economic security tools, and what to expect on tariffs from whoever wins the US Presidential elections in November.

Cheers

Bernard

PS: Catch you tomorrow with the Bank of England’s rate decision?and next-day analysis of the super-sized start to the Fed’s easing cycle.