🚨 JPMORGAN EXPECTS FEDERAL RESERVE TO CUT INTEREST RATES BY 25 BASIS POINTS NEXT WEEK 🚨
JPMorgan has publicly shifted its forecast, now anticipating a 25bps (0.25%) rate cut by the U.S. Federal Reserve at its September policy meeting, amid signs of labor market weakness and increased political uncertainty. The probability of a rate cut, according to CME FedWatch, has surged to over 90%. JPMorgan’s analysts believe recent jobs data and recessionary signals, along with new Fed board appointments, have tipped the scales toward a cut—potentially the first of several.
🔑 Key Points
🔹 Shifted Outlook: JPMorgan previously expected the first rate cut in December but moved the forecast forward due to deteriorating job growth, downward revisions of employment figures, and persistent inflation risks.
🔹 Market Probability: Traders now see a nearly 100% chance of a 25bps cut at the September meeting, with markets pricing in further cuts through 2026.
🔹 Political Influence: Recent White House appointments—such as Stephen Miran to the Fed board—have increased the likelihood of near-term loosening. The move comes as political pressure mounts to stimulate the economy ahead of the 2026 election cycle.
🔹 Economic Backdrop: Decelerating hiring, inflation running above expectations, and a lack of improvement in labor data suggest conditions warrant easing. JPMorgan cautions, however, that the rate cut may ignite a “sell the news” response if markets pull back to reassess fundamentals after the Fed’s announcement.
🔹 Longer-Term Path: JPMorgan expects three additional 25bps cuts after September before the Fed pauses, potentially bringing the policy rate down to a target range of 3.25–3.5% by Q1 2026.
💡 Why It Matters
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Impact on Borrowing & Markets: Lower rates will impact everything from mortgage costs to equity market direction and bond yields.
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Global Ripple Effect: U.S. policy moves influence global rates, risk appetite, and currency markets.
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Investor Implications: JPMorgan and other banks highlight the need to revisit portfolio strategies, with bond yields and cash returns expected to drop as cuts unfold.
JPMorgan’s revised forecast reflects a consensus shift on Wall Street, with the Fed’s September rate cut now widely anticipated and likely to shape monetary policy and market sentiment for months ahead.
https://www.reuters.com/business/jpmorgan-brings-forward-fed-rate-cut-forecast-september-2025-08-08