JPMorgan says December Rate Cut back on the table as Fed signals shift

Economists at JPMorgan Chase now believe that the Federal Reserve will cut the interest rates in December, reported Bloomberg. This is a shift from their earlier view, when they thought the Fed would wait until January to make any cuts.

The change came after several key Fed officials, including New York Fed President John Williams, made comments that pointed to a possible early rate cut. Until recently, JPMorgan expected the Fed to hold steady following last week’s delayed September jobs report.

Fed may deliver two small cuts

The Federal Open Market Committee, led by Chair Jerome Powell, is scheduled to meet in Washington on December 9 and 10. JPMorgan now expects the Fed to deliver two small cuts, one next month and another in January.

Michael Feroli, the bank’s chief US economist, told clients that the latest statements from Fed officials suggest the committee is more likely to lower rates in two weeks.

This updated outlook also matches what swap traders expect. Markets are now pricing in about an 80% chance of a quarter-point rate cut next week, a sharp jump from less than 30% just a week earlier, before the September labor data and before Williams’ remarks.

Wall Street ended higher as hope for December Fed rate cut boost markets

Wall Street continued its winning streak on Wednesday, lifted by a rebound in major tech stocks and growing expectations that the US Federal Reserve will cut interest rates in December. This upbeat mood came just a day before the Thanksgiving holiday.

All three major US stock indexes posted gains for the fourth day in a row. Investors seemed less worried about high tech valuations, which had caused losses across markets last week.