Fed Delivers Measured 25bp Cut

• The US Federal Reserve trimmed the fed funds target range by 25bp to 4.00%–4.25%, its first move after five meetings on hold.
• The decision passed 11–1, with Trump-appointee Stephen Miran dissenting in favour of a deeper 50bp cut. Powell rejected the idea of an aggressive easing cycle, instead calling the move a “risk management cut” while highlighting the committee’s stronger GDP forecasts.
• His cautious tone saw Treasuries drift higher as markets pared back expectations for a fast run of cuts.
• Price action was volatile: the 2yr yield dropped from 3.54% to 3.47% on the announcement before snapping back to 3.55%, while the 10yr dipped to 4.00% before closing nearer 4.04%.
• Attention now shifts to Australia’s labour force survey at 11:30am, with unemployment expected to remain at 4.2%, a key marker for how much scope the RBA has to ease into year-end.