JPMorgan Chase reaffirms its expectation for the Federal Reserve to cut interest rates by 50 basis points in September

As inflation falls and employment data weakens, JPMorgan economists reiterate their expectation for a 50 basis point rate cut at the Federal Reserve's policy meeting next week. "We believe what the Fed should do next week is clear, that is to cut interest rates by 50 basis points to adapt to changes in risk balance," wrote Michael Feroli, chief U.S. economist at the bank, in a report on Friday. Michael Feroli expects that the median forecast for this year's end policy rate in the Fed's latest quarterly prediction will be 100 basis points lower than its June forecast, implying two more cuts of 25 basis points each by 2024; he predicts an additional reduction of 150 basis points by the end of 2025. If the Fed only cuts rates by 25 basis points next week, then this year's median rate cut could be just 75 basis points, wrote Michael Feroli.