MW JPMorgan says it now sees four Fed rate cuts on the horizon as Trump nominates Miran to Fed

By Joseph Adinolfi

The bank's chief U.S. economist now expects the Fed will deliver a rate cut in September, followed by three more in subsequent meetings

JPMorgan Chase & Co.'s top U.S. economist now expects the Federal Reserve will cut interest rates three times in 2025, beginning with a 25-basis-point cut in September.

The change comes after President Donald Trump on Thursday nominated Stephen Miran, chairman of the president's Council of Economic Advisers, to fill a vacant seat on the central bank's board of governors. Michael Feroli, the bank's chief U.S. economist, had previously expected the Fed to cut rates just once this year, in December.

Feroli now expects the central bank will start cutting again next month, and follow with an additional cut at each of the Fed's subsequent three meetings in October, December and January. The Fed delivered a 50-basis-point rate cut in September 2024. Two more 25-basis-point cuts followed, in November and December. But the central bank has been on hold ever since, with Chairman Jerome Powell saying the central bank is waiting to assess the impact of Trump's tariffs on consumer prices.

The JPMorgan economist explicitly linked the change in his call to Trump's decision to pick Miran to fill a recently vacated seat on the Fed's board. Trump has said Miran will only serve in the role until January, when the term of departing Gov. Adriana Kugler had been slated to end.

Although Miran has in the past argued for the Fed to keep interest rates high, Feroli said he doubts the economist, who has a Ph.D from Harvard, still holds that view. More recently, he has argued against the notion that the new levies Trump has imposed since returning to the White House will lead to a meaningful uptick in price pressures.

See: Miran tapped by Trump for Fed governor post. Why 'he's just a seat warmer.'

While rushing CEA chair's confirmation through the Senate ahead of the Fed's next meeting might prove to be a heavy lift, it is certainly possible, Feroli said. And although new Fed governors have sometimes observed a tradition of not voting during their first meeting, the JPMorgan economist doubts Miran would do the same.

Two Fed governors, Christopher Waller - who is reportedly in the running to be the next Fed chairman - and Michelle Bowman, broke with Powell and the rest of the committee and voted in favor of a rate cut at the central bank's meeting in July. That marked the first time since 1993 that two Fed governors have dissented on a policy vote.

A third dissent might make leaving rates on hold unfeasible, even if inflation sees an uptick or the unemployment rate declines.

Should the unemployment rate rise to 4.4% or higher in the August jobs data, due a couple of weeks before the Fed plans to meet, a 50-basis-point cut in September might be a possibility, Feroli said.

Whatever happens next, the dismal July jobs report has made a September cut the path of least resistance, Feroli said. Even if inflation as measured by the Fed's preferred gauge, the personal consumption expenditures price index, remains above the central bank's 2% target.

In June, the latest reading available, the PCE index showed year-over-year headline inflation at 2.6%. That rose to 2.8% if volatile food and energy prices were excluded.

While the Fed has cut interest rates with stocks in record territory before, easing borrowing costs with stocks at records and inflation running above target is far more rare. That could mean a cut in September won't be broadly welcomed by the committee.

For what it's worth, futures traders already see a cut in September as extremely likely, according to data from the CME Group's FedWatch tool. The tool recently put the probability of a cut in September at just shy of 90%, with the expectation of three cuts total in 2025 running at about 50%.

-Joseph Adinolfi

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August 08, 2025 14:35 ET (18:35 GMT)

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