J.P. Morgan Analysts Predict No Immediate Fed Rate Cuts

J.P. Morgan analysts have expressed their view that the Federal Reserve is unlikely to cut interest rates in the near term. This assessment comes amidst a backdrop of economic conditions and political pressures that have influenced the central bank's decisions. The Fed's cautious approach this year has drawn criticism from various quarters, including the President, who has advocated for more aggressive rate cuts. However, analysts at J.P. Morgan believe that the upcoming employment report, which is expected to be robust, will further solidify the Fed's stance against immediate rate cuts.

The central bank's governor, Michelle Bowman, has hinted at the possibility of a rate cut as early as July, reflecting the internal divisions within the Fed regarding monetary policy. Despite these differing views, J.P. Morgan's analysis suggests that the Fed will maintain its current policy, at least for the next couple of meetings. This perspective is supported by the resilient inflation and geopolitical risks that have cast doubt on the Fed's earlier signals of rate cuts in 2025. The central bank's June 2024 indication of two rate cuts in 2025 now faces skepticism, as economic indicators and global uncertainties continue to shape the Fed's policy decisions.

Analysts noted that most Fed officials support Powell's cautious stance and are unlikely to quickly back a rate cut. Analysts expect that the upcoming jobs report will be relatively robust, showing a slowdown in growth but no signs of a fracture that would prompt the Fed to act more quickly.