JPMorgan says it now sees four Fed rate cuts on the horizon as Trump nominates Miran to Fed

JPMorgan's chief U.S. economist, Michael Feroli, has significantly revised his Federal Reserve rate cut forecast to four 25-basis-point reductions, starting in September, followed by cuts in October, December, and January. This accelerated timeline is explicitly attributed to President Trump's nomination of Stephen Miran to a vacant Fed board seat, which Feroli believes could, alongside existing dissents, pressure the central bank towards easing despite inflation remaining above target. The dismal July jobs report further supports a September cut, which futures markets now price in with nearly 90% probability.

Analysis

JPMorgan has materially accelerated its Federal Reserve rate cut forecast, now projecting four consecutive 25-basis-point reductions beginning in September, a significant shift from its previous expectation of a single cut in December. Chief U.S. Economist Michael Feroli directly attributes this change to President Trump's nomination of Stephen Miran to the Fed's board, positing that his vote could tip the balance toward easing. The analysis suggests Miran would join the two existing dissenters, Waller and Bowman, who voted for a cut in July, potentially making it unfeasible for the committee to hold rates steady. This dovish pivot is further supported by a "dismal" July jobs report, which is seen as creating a path of least resistance for a September cut, even with headline PCE inflation at 2.6% and core PCE at 2.8% as of June. The forecast highlights an unusual policy environment where the Fed may ease with equity markets at record highs and inflation persistently above its 2% target. Feroli also flags a potential for a more aggressive 50-basis-point cut should the August unemployment rate reach 4.4%, while noting that futures markets already imply a near 90% probability of a September rate reduction.

Key Decisions for Investors

• Investors should consider positioning for a more aggressive easing cycle by evaluating exposure to rate-sensitive assets, such as long-duration fixed income and growth stocks, which may benefit from the forecasted series of cuts.
• Closely monitor the confirmation process for Stephen Miran to the Fed board and the forthcoming August jobs data, as these are the key catalysts cited for the accelerated rate-cut timeline and could influence the magnitude of the initial cut.
• Acknowledge the elevated risk that easing into an environment of above-target inflation and record equity prices could introduce market volatility or signal a policy error, warranting a cautious stance on overall risk allocation.