BENGALURU, India – J.P. Morgan has revised its outlook for U.S. monetary policy, now predicting that the Federal Reserve (Fed) will implement a 25-basis-point interest rate cut in December, reversing its earlier expectation of holding rates steady until January.

The shift in JP Morgan’s forecast follows recent comments from key Fed officials, including New York Fed President and FOMC Vice Chair John Williams, which suggested that the central bank may move sooner than previously anticipated.

Market Signals and Analyst Insights

In a note to clients, Michael Feroli, chief U.S. economist at JP Morgan, stated:

“While the next FOMC meeting remains a close call, we now believe the latest round of Fedspeak tilts the odds toward the Committee deciding to cut rates in two weeks from today.”

Feroli added that the bank still anticipates a final rate cut in January, depending on incoming economic data.

Traders are increasingly pricing in a high probability of a quarter-point interest rate cut in December, with the CME FedWatch tool indicating roughly an 85% chance.

Context: Data and Fed Expectations

Earlier this month, JP Morgan had withdrawn its December cut forecast due to a delayed September jobs report caused by a U.S. government shutdown. Goldman Sachs also noted that, with no major economic data releases scheduled before the December 9–10 FOMC meeting, the September jobs report may have effectively sealed the case for a 25-basis-point rate reduction.

The Fed’s decisions will continue to be influenced by employment trends, inflation data, and overall economic growth, all key indicators for determining the future trajectory of U.S. monetary policy.

Implications for Investors and Markets

A December rate cut could provide relief to financial markets, potentially boosting equities, corporate borrowing, and consumer spending. It also signals the Fed’s willingness to support economic growth amid uncertainties, balancing inflation control with broader macroeconomic stability.

JP Morgan’s revised outlook highlights the importance of monitoring Fed communications and economic indicators closely, as central bank guidance significantly influences bond yields, currency markets, and investor sentiment.