JPMorgan Chase & Co. has flipped its Fed call and now expects the U.S. central bank to deliver a 25 basis point rate cut at the December 9–10 FOMC meeting, rather than waiting until January. The bank still projects another quarter‑point cut in January, implying two moves in quick succession as the Federal Reserve responds to softer labor data and more dovish public comments from key officials.
What JPMorgan Changed
Until very recently, JPMorgan’s base case was that the Fed would hold rates steady in December and start easing in January. After a new round of speeches from policymakers like New York Fed President John Williams signaling openness to “near term” easing, its economists judged the odds had tipped toward an earlier cut. As a result, the bank now assumes a December cut followed by a “final” cut in January in its U.S. macro forecasts.
Drivers Behind The New December Call
Several factors pushed JPMorgan to revise its view:
-
Fed officials have emphasized rising downside risks to employment and cooling labor conditions, with less concern that inflation will re‑accelerate.
-
Market pricing via futures and swaps has shifted sharply, with implied odds of a December cut jumping from roughly 30 percent to about 80–85 percent within a week.
JPMorgan’s team argues that with data releases still constrained by earlier government shutdown delays, policymakers are leaning more on labor and inflation trends already in hand, which favor a modest, pre‑emptive easing step.
SOURCE
What Markets Are Pricing In
According to CME FedWatch style measures and related futures pricing, traders now see a strong probability—around four in five—of a 25 basis point reduction at the December meeting. This aligns closely with JPMorgan’s updated forecast and has helped push U.S. stock indexes higher and Treasury yields lower as investors reprice risk assets for earlier easing.
