The top economist at JPMorgan Chase (JPM) now expects the U.S. Federal Reserve to cut interest rates three times in 2025, starting with a 25-basis-point reduction in September.
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The new outlook on interest rates comes after U.S. President Donald Trump nominated Stephen Miran, Chair of the Council of Economic Advisers, to fill a vacant seat on the Fed’s board of governors.
Michael Feroli, JPMorgan’s chief U.S. economist, previously forecast only one rate cut this year, in December. However, Feroli now expects the central bank to start cutting rates in September, and to do so again at each of the Fed’s subsequent three meetings in October, December, and January 2026.
Trump’s Fed
The Federal Reserve lowered interest rates by one full percentage point in the second half of 2024 but has been on the sidelines ever since, citing economic uncertainty as a need to be cautious on rates. Fed Chair Jerome Powell has repeatedly said that the central bank is waiting to assess the impact of President Trump’s tariffs on inflation before acting.
This approach has not sat well with President Trump, who has repeatedly criticized Powell and threatened to fire him before his term ends in May 2026. The president has also said he wants to remake the Fed in his own image and appoint a political loyalist to be the next central bank governor.
JPMorgan’s Feroli said this all begins with President Trump’s decision to pick Miran to fill a recently vacated seat on the Fed’s board.
S&P 500 Performance
Let’s look at the performance of the SPDR S&P 500 ETF Trust (SPY), which tracks the benchmark U.S. stock index. As one can see in the chart below, the S&P 500 has gained 9% this year.
