JPMorgan, with over $4 trillion in assets under management, now expects the Federal Reserve to begin cutting interest rates as soon as September, moving its previous forecast from December. Analysts project a 25 basis point cut at the September 16–17 meeting, followed by three additional cuts of the same size in subsequent meetings.
Labor Market Weakness Accelerates Shift
The bank’s revised outlook comes amid signs of a cooling labor market. Recent data show a rise in jobless claims and a potential increase in the unemployment rate. Political uncertainty surrounding Stephen Miran’s nomination to the Fed Board has also added to the pressure for an earlier policy shift.
Internal Divisions Possible at the Fed
If Miran is confirmed before the September meeting, JPMorgan warns his presence could deepen divisions among policymakers. The firm estimates as many as three dissenting votes could emerge an unusually high number for the Federal Open Market Committee.
Market Pricing Reflects High Probability
Markets have rapidly priced in this scenario, with the probability of a September rate cut exceeding 89% according to CME Group data. This marks a sharp jump from earlier in the summer and signals growing investor confidence that the Fed will act sooner than planned.
Source: Reuters, MarketWatch
