J.P. Morgan revised its interest-rate forecast on Wednesday, now predicting that the Federal Reserve will deliver a 25-basis-point cut in December.
The bank previously expected policymakers to hold rates steady until January.
The change in view followed public comments from key officials, including New York Fed President and FOMC Vice Chair John Williams, who appeared to open the door to an earlier easing step.
His remarks were widely interpreted as signaling the central bank’s emerging stance ahead of its mid-December meeting.
Goldman Sachs also issued a research note suggesting that the September jobs report may have played a decisive role in shaping expectations for the upcoming decision.
With no major data releases scheduled before the December 9–10 gathering, analysts said the window for new developments influencing policy had narrowed.
Economists See Rising Odds of December Cut
“While the next FOMC meeting remains a close call, we now believe the latest round of Fedspeak tilts the odds toward the Committee deciding to cut rates in two weeks from today,” said J.P. Morgan’s chief U.S. economist Michael Feroli.
Feroli added that the bank had returned to its previous forecast calling for another cut in January.
Markets were broadly aligned with this view.
Traders priced in a nearly 85% probability of a 25-basis-point cut in December, according to the CME FedWatch tool.
Earlier this month, J.P. Morgan withdrew its December rate-cut call after a delayed jobs report suggested a still-tight labor market.
The combination of evolving economic data and shifts in guidance from Fed officials has since brought expectations back toward a near-term cut.
Market Context Ahead of Final Meetings of 2025
The Federal Reserve has held rates at elevated levels throughout most of the year as it sought clearer signals that inflation was continuing to stabilize.
Recent economic indicators have pointed toward a cooling trend, adding momentum to predictions of easing.
With the central bank approaching its final meetings of 2025, investors are watching closely for confirmation of how quickly policymakers intend to normalize rates.
Financial markets are preparing for the possibility that the December meeting could mark the beginning of a new phase in the Fed’s policy cycle.
