JPMorgan sees Fed doing ‘right’ thing and cutting 50 basis points

JPMorgan Chief U.S. Economist Michael Feroli believes it is clear that the Federal Reserve next week should recalibrate the policy rate 50 basis points lower to “adjust for the shifting balance of risks.” What the Federal Reserve will do is less clear, but JPMorgan is sticking with its call “that they will do the ‘right’ thing and cut 50bp,” Feroli writes in a research note. The firm expects the median dot plot for this year will be 100 basis points lower than the current rate, guiding to two more 25 point cuts at the last two meetings of the year. It expects next year’s median dot plot will point to a further 150 points of easing, and that the 2026 and 207 dots will remain near the longer-run dot at 2.75%-3.0%. Should the Federal Reserve “take the timid approach” and trim 25 basis points next week, this year’s median dot would likely only show 75 points of easing, according to JPMorgan.