JPMorgan is delivering a stark message to investors anticipating Federal Reserve rate cuts in the near future. According to Michael Feroli, chief U. S. economist at JPMorgan, the firm forecasts no rate cuts throughout 2026. In fact, JPMorgan projects the Fed's next move will be a 25 basis point rate hike in the third quarter of 2027, potentially bringing the upper band of the federal funds rate to 4.00%. The current rate sits between 3.50% and 3.75%.
This outlook diverges from other major forecasters. For example, Goldman Sachs anticipates two rate cuts in June and September 2026. Meanwhile, Barclays and Morgan Stanley have pushed back their expectations for rate cuts to mid-2026. Even the Federal Reserve's own "dot plot" projects one 25bps rate cut for 2026 and another for 2027. The CME FedWatch tool shows only a 27.5% probability of a rate cut by December 2026.
Despite the hawkish forecast, Feroli noted that the prediction isn't set in stone. He stated that a weakening labor market or a material fall in inflation could prompt the Fed to ease its monetary policy later this year. The Fed also acknowledged economic uncertainties in its March statement, particularly regarding the implications of Middle East developments on the U. S. economy.
JPMorgan CEO Jamie Dimon recently stated that markets have largely abandoned expectations of Fed rate cuts this year due to persistent inflation concerns. He emphasized the need for the U. S. to strengthen its competitiveness and announced JPMorgan's strategy to mobilize over $1 trillion towards this effort.
