JPMorgan expects Fed to cut interest rates in its next four meetings

JPMorgan expects the Federal Reserve to cut interest rates by 25 basis points at its next meeting in September, citing signs of weakness in the labor market and uncertainty surrounding the next Fed chair, according to President Donald Trump’s nominations.

The bank previously forecast one 25 basis point rate cut in December, but said in a note, “Risks now point to an early move, followed by three more quarter-point cuts before the Fed pauses.”

JPMorgan analyst Michael Feroli wrote, “For Powell, risk management considerations at the next meeting may go beyond balancing employment and inflation risks.”

Trump nominated Stephen Meran, chairman of the Council of Economic Advisers, to fill an interim seat on the Federal Reserve Board on Thursday, replacing outgoing Governor Adriana Kogler.

Meran’s confirmation before the September 16-17 policy meeting remains uncertain, but JPMorgan said his presence could exacerbate divisions within the rate-setting committee. This move comes after months of pressure on the Federal Reserve to cut interest rates, often clashing with its chairman, Jerome Powell, over maintaining tight monetary policy. “If Merrin becomes governor by the time of the next meeting, that could mean three dissenters…that’s a lot of dissent,” Feroli said.