JPMorgan has made a sharp turn in its Fed forecast, now expecting multiple interest rate cuts starting as soon as September 2025.
The bank’s economists see as many as four quarter-point cuts rolling out over the coming months, far more aggressive than their earlier call for just one cut later in the year.
The shift comes on the back of softer labor market data and growing uncertainty around Fed leadership.
July’s US jobs report showed unemployment nudging up to 4.2% from 4.1% in June, with weekly jobless claims also on the rise.
JPMorgan’s team says this cooling in employment is a clear sign the economy is slowing faster than expected, making the case for the Fed to ease policy sooner rather than later.
JPMorgan’s Fed watch
Another driver of JPMorgan’s forecast shift is the unsettled landscape at the Federal Reserve.
President Trump’s nomination of Stephen Miran, a vocal advocate for looser monetary policy, as a temporary Fed governor has raised the prospect of deeper divisions within the central bank.
JPMorgan chief US economist Michael Feroli noted that if Miran is confirmed before September’s meeting, there could be “three or more dissenting votes” in the rate-setting committee, adding a fresh layer of complexity to policy decisions.
Markets have quickly swung in line with JPMorgan’s view. CME Group’s closely watched FedWatch tool now shows traders pricing in nearly a 90% chance of a 25-basis-point cut at the Fed’s next meeting, up from just 38% a week earlier.
Many investors are also betting on a series of cuts in the months that follow, matching JPMorgan’s expectation for a steady pace of easing until the central bank signals a pause.
Wall Street’s middle ground
If JPMorgan’s view plays out, the Fed’s benchmark rate could slide to roughly 3.25%–3.50% by December, from the current 4.25%–4.50%.
Trump has been openly pressing for easier policy, saying cheaper borrowing would help growth and cut the government’s interest bill, arguments that will only get louder as the 2026 race moves into gear.
All eyes are now on the August jobs data. A jump in unemployment to around 4.4% or more could tip the Fed toward moving sooner and cutting deeper.
On the other hand, a surprise pickup in hiring or inflation that refuses to ease could slow the pace or even push the first cut further out, something a few Fed officials have already signaled.
With data and market bets now pointing the same way, it’s getting harder to see the Fed standing pat in September.
Traders, corporate boards, and lawmakers will be poring over every jobs print and Fed remark in the weeks ahead, trying to gauge how sharp the turn might be.
JPMorgan’s latest call has effectively become the middle ground on Wall Street, matching what many of the big banks now expect.
The post JPMorgan sees Fed cutting rates 5 times starting in September appeared first on Invezz