❗️📝Risk In The Week Round Up

**As seen in Risk In The Week report 09/13/25, get full access now!

FOMC Rate Decision:The Federal Reserve opted to hold the federal funds rate steady at a target range of 4.25% to 4.50%, marking the fifth consecutive meeting without a change. This decision reflects the Fed's ongoing assessment of a labor market that remains solid but shows signs of cooling, alongside inflation that has eased from its peaks but remains above the 2% target at around 2.9% as of the latest August data. Fed Chair Jerome Powell emphasized in the post-meeting press conference that while progress on inflation has been "nearly sufficient," the central bank needs more confidence that it is sustainably heading toward 2% before easing policy further. GDP growth was forecasted at 2.1% for 2025 (down slightly from prior estimates), unemployment at 4.2%, and core PCE inflation at 2.6%. The "dot plot" showed a median expectation for the funds rate to end 2025 around 3.9%, implying about 50 basis points of total cuts for the year. Analysts at Rabobank expect the FOMC to reduce the target range by 25bp from 4.25-4.50% to 4.00-4.25% at the meeting on September 16-17. This is fully priced in by the market with a small residual probability of a 50bp move. Analysts surveyed by Bloomberg are split 55/9 in favour of a 25bp cut. Wells Fargo expects the updated dot plot to signal more easing through the remainder of this year and next. The composition of the Committee looks set to tilt in a more dovish direction with Stephan Miran on track to be confirmed.

Australia Jobs Report:The latest jobs report showed a resilient yet softening labour market, with employment growth driven by full-time jobs offsetting a decline in part-time roles, while the unemployment rate improved slightly. Total employment rose by 24.8K, marking a modest increase. This was largely driven by a surge of 60.4K full-time jobs, though part-time employment fell by 35.6K jobs. The unemployment rate edged down to 4.2% from 4.3% in June, the labour force participation rate increased to a record high of 67.1% (up 0.1 percentage points), particularly among women, reflecting stronger workforce engagement.

For August, economists at Westpac have pencilled in a lift of +15k, consistent with a continued gradual softening. Given the slower pace of modelled population growth in the survey though, such a move would not see the employment-to- population ratio move materially from its current level of 64.2%, they wrote in a note. Westpac added that they see the unemployment rate ticking up in August to 4.3%.

BoE Rate Decision: Back in August, the MPC voted to reduce the Bank Rate by 0.25 percentage points to 4.00%. This marked the fourth rate cut since the easing cycle began in August 2024, bringing the rate to its lowest level in over two years, but the decision was narrowly approved on a 5-4 vote after a second ballot (one member had initially proposed a larger 0.50% cut). The MPC's approach remains cautious, balancing persistent inflationary pressures against signs of economic softening.

The MPC noted that disinflation in underlying prices and wages is progressing, but the recent inflation spike— particularly from administered prices like energy and food— warranted a measured cut rather than more aggressive easing. The committee emphasized that monetary policy is working to bring inflation sustainably back to the 2% target, but risks from higher wage costs and potential business price pass-throughs remain. The BoE's August 2025 Monetary Policy Report forecasted inflation peaking at around 4% in September 2025 before declining toward 2% over the medium term.

UBS said it expects the Bank of England to keep the policy rate unchanged at 4.0% on Sept. 18 and they predict no changes in the BoE’s forward guidance with the MPC sticking to its previous message of a "gradual and careful" approach to easing. While UBS thinks that improving underlying services inflation should allow the BoE to continue with its gradual approach to easing, cuts might be delayed in the event of further upside surprises in inflation ahead of the November meeting.

BoJ Rate Decision:The BoJ voted unanimously to maintain the short-term policy rate target unchanged at 0.5%. This marks the third consecutive hold since the 25 basis point hike to this level in July 2025 (following the initial adjustment from 0.25% in January 2025), reflecting a patient normalization strategy amid steady but not accelerating inflation, a stable yen, and external uncertainties from U.S. trade policies and global growth. Japan's economy expanded by 0.7% in Q2 2025 (annualized), supported by robust private consumption and business investment, though exports softened due to U.S. tariffs impacting auto and electronics sectors. Core CPI inflation held at 2.5% in August 2025, above the 2% target but with underlying measures showing moderation; wage growth remained firm at around 3.2% year-over-year, driven by spring negotiations, but services inflation eased slightly. The BoJ assessed that inflationary pressures are progressing toward sustainable 2% levels, but risks from U.S. tariffs (e.g., potential pass-through to domestic prices) and softening global demand warrant caution. Governor Kazuo Ueda emphasized in the post-meeting press conference that the economy is evolving in line with the July Outlook for Economic Activity and Prices (which projected core inflation at 2.4% for FY2025), but further hikes would depend on confirming durable wage-price dynamics without overheating.

Analysts at MUFG noted that the potential rate hike recently signaled by the BoJ is likely to support the yen in the short- term. MUFG said BoJ officials will also monitor signals from the new government, particularly what economic measures it might propose and how those steps could affect growth, inflation, and financial markets. Following the Bloomberg report, Japan's rate market priced in a higher probability of a BoJ hike by year-end. About 15 basis points of increases are now seen by the December policy meeting, up from 12 bps on Monday after Ishiba's resignation, MUFG said.