Macquarie forecasts single rate cut in 2025 after robust jobs report

The latest US employment report indicated a strengthening labor market, with Macquarie economists interpreting the data as a sign of stabilization expected to continue into 2025.

The December report highlighted a substantial increase of 256,000 in headline payrolls, marking the most significant gain since March, although the numbers might reflect seasonal variations that could normalize in January.

The household survey, another component of the report, revealed an even more substantial employment increase of 478,000, which effectively countered a previously concerning result from November.

Consequently, the unemployment rate edged down to 4.1%. The report also pointed to positive trends in leading indicators, such as a decrease in the number of permanent job losers, signaling a robust job market.

In light of these findings, Macquarie’s economists maintain their prediction of limited further monetary easing by the Federal Open Market Committee (FOMC).

They foresee only one additional rate cut of 25 basis points, with the fed funds rate expected to bottom out in the range of 4.0% to 4.25% for the current cycle.

While the initial expectation was for the cut to occur around March or May, the economists now suggest that the timing might be pushed back due to shifting risks.

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