JPMorgan Chase (JPM) has had a change of heart.
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Analysts at the New York banking giant say they now expect the U.S. Federal Reserve to lower interest rates by 25 basis points at the conclusion of its Dec. 10 policy meeting. Previously, JPMorgan said that it expected the U.S. central bank to hold interest rates steady until January.
The change in outlook comes after comments from several officials at the U.S. Federal Reserve, including New York Fed President John Williams, who said he favors a December rate reduction amid signs that the American labor market is slowing.
The Rate Cut Bandwagon
Expectations for a December interest rate cut have been all over the map. On Halloween, futures markets were pricing in a greater than 90% chance that the Fed would lower rates on Dec. 10. That expectation then dropped to 30% in early November after downbeat comments from Fed Chair Jerome Powell.
Now, markets see the odds of the Fed cutting again in December at 85%. In a recent economic note, investment bank Goldman Sachs (GS) said that with no other major data scheduled for release before Dec. 10, “the September jobs report may have sealed a 25 basis points cut.”
Economic data releases out of Washington, D.C. have been delayed by the federal government shutdown this autumn.
Is JPM Stock a Buy?
The stock of JPMorgan Chase has a consensus Moderate Buy rating among 17 Wall Street analysts. That rating is based on 11 Buy and six Hold recommendations issued in the last three months. The average JPM price target of $344.31 implies 11.92% upside from current levels.
