Global: J.P. Morgan Revises Outlook, Now Expects Fed Rate Cut in December

J.P. Morgan has adjusted its outlook for U.S. monetary policy, now projecting that the Federal Reserve will implement a 25-basis-point rate cut in December—reversing its earlier expectation that the first cut would come in January.

The revision follows recent commentary from senior Federal Reserve officials, including New York Fed President and FOMC Vice Chair John Williams, whose remarks signaled a growing likelihood of an earlier policy shift.

In a separate research note, Goldman Sachs indicated that the absence of additional major economic data releases before the December 9–10 meeting means the September employment report may have effectively set the stage for a December rate cut.

“While the next FOMC meeting remains a close call, the latest round of Fedspeak tilts the odds toward the Committee deciding to cut rates in two weeks,” said Michael Feroli, J.P. Morgan’s Chief U.S. Economist. “We’re back to looking for a final cut in January.”

Market sentiment appears aligned with this outlook. According to the CME FedWatch tool, traders are pricing in nearly an 85% probability of a quarter-point cut in December.

J.P. Morgan had previously withdrawn its December cut forecast earlier this month following the delayed release of the September jobs report caused by the U.S. government shutdown.