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Nomura has revised its outlook for U.S. monetary policy, stating that it no longer expects the Federal Reserve to deliver another rate cut in December 2025, following the central bank’s quarter-point reduction this October.
The Japanese brokerage, which had previously projected an additional 25-basis-point cut in December, now anticipates that the Fed will hold rates steady through the end of the year.
The Fed’s latest move—a 0.25% rate cut—was widely anticipated as an effort to cushion potential softness in the labor market. However, Nomura analysts believe the data in the coming months, while “modestly dovish,” will not be weak enough to justify further easing.
“We doubt the weakness will be sufficient to rekindle FOMC concerns of a deteriorating labor market,” Nomura said in a research note.
Federal Reserve Chair Jerome Powell also signaled caution after the latest policy meeting, highlighting internal divisions among policymakers and the limited availability of real-time economic data as factors that could restrain additional cuts this year. Powell emphasized the Fed’s need to balance support for employment with vigilance against inflationary risks.
Looking ahead, Nomura now expects the next phase of monetary easing to begin in 2026, projecting three 25-basis-point cuts in March, June, and September—a more gradual path that reflects the Fed’s wait-and-see approach amid ongoing economic uncertainty.
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