Deutsche Bank-Fed Watcher Soft jobs report cements September cut-117682453

2025 19:51:05 GMT2025 19:51:05 GMTResearchDeutsche Bankamy.yang@db.comAmy Yang | (+1) 212 250 9959 | amy.yang@db.comSeptember 08, 2025IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS.Fed Watcher: Soft jobs report cements September cutDeutsche BankResearchAmy YangEconomist(+1) 212 250 9959 | amy.yang@db.comMatthew LuzzettiChief US Economist(+1) 212 250 6161 | matthew.luzzetti@db.comBrett RyanSenior Economist(+1) 212 250 6294 | brett.ryan@db.comJustin WeidnerEconomist(+1) 212 469 1679 | justin-s.weidner@db.com Avik ChattopadhyayResearch Associateavik-a.chattopadhyay@db.comSeptember 08, 2025ResearchDeutsche Bankamy.yang@db.comAmy Yang | (+1) 212 250 9959 | amy.yang@db.comSeptember 08, 2025DB Fed Watcher: Soft jobs report cements September cut2Fedspeak Who**TakeawaysBias*Musalem [4] (09/03)▪ Currently modestly restrictive policy consistent with jobs, inflation data, & multiple Taylor rule prescriptions▪ Balancing risks to both mandates is key. Placing too much weight on either mandate runs risks▪ See H2 growth similar to H1 at 1.4%▪ Tariff pass through the economy over 2-3 quarters, then fade. But also see risks of persistence▪ See labor market to cool orderly, now near full employment▪ See increasing downside risks to labor market over recent data, decreasing risks to inflation▪ Policy uncertainty continued to lift, with stimulus from fiscal policy▪ Breakeven payrolls 30k-80k, fewer than 100k in past years▪ Tariff passthrough so far about 20%, less than a full percent as expected, though need to watch more data ▪ Below-trend growth and stable long-run inflation expectation should help disinflation. See inflation resume path towards target in 26H2, with risks of more persistent inflationKashkari [4] (09/03)▪ Breakeven hiring rate 75k▪ Rates have some room to fall gently▪ Economy slowing, soft landing▪ Rising goods inflation from tariffs. Need to watch and gauge persistence of tariff effectsFedspeak, continued Who**TakeawaysBias*Waller [1] (09/03)▪ Been clear that we should cut in Sept. Need to get ahead of labor market downshift▪ Don’t need to go lock steps in cutting rates. Can always adjust the pace▪ See multiple cuts over next few months▪ Need to cut to neutral which is now 100-150bps below current rate▪ Tariffs will not cause long-run inflation, back to 2% in 6-7 monthsBostic [3] (09/03)▪ Still see one cut this year. Sept. in play, depending on data▪ Price stability still primary concern▪ Not unambiguously clear that labor market is weakening materially▪ Risks towards dual mandates more balanced▪ See current policy marginally restrictive. Slowing in labor market warrants some policy easing this year– likely one cut▪ Disinflation progress stalled over the past year. Continue to believe tariff’s price effects won’t fade fast, and will not materialize for some months▪ Staff estimate of breakeven p