JPMorgan Pulls Forward Fed Rate Cut To September

The Federal Reserve is seen as more likely to slash interest rates at its upcoming policy meeting in September following President Donald Trump’s nomination of a temporary governor of the central bank, according to analysts at JPMorgan Chase (NYSE:JPM).

In a note following the announcement, the bank pulled forward its expectation for the next 25 basis point cut to September. It had previously predicted that such a reduction would come in at the Fed’s gathering in December.

"We continue to look for three like-sized cuts at the subsequent three meetings before pausing indefinitely," the strategists added.

Debate is swirling around the trajectory of U.S. interest rates. While several Fed officials this week have signaled a willingness to cut borrowing costs in September, one member -- Atlanta Fed President Raphael Bostic -- cautioned that there may only room for just the one reduction this year.

Against this backdrop, Trump announced on Thursday that his top economic adviser, Stephen Miran, will be his pick to take an empty governor seat at the Fed.

If confirmed by Senate lawmakers, Miran would have the ability to vote on upcoming interest rate decisions. Notably, Miran has been a consistent supporter of Trump, who has himself been deeply critical of a decision by the Fed and its Chair Jerome Powell not to quickly ratchet down rates.

Miran, who previously served in the Treasury Department during Trump’s first term and also worked as a senior strategist at a hedge fund, has particularly argued that sweeping U.S. tariffs will not massively drive up inflation domestically and the costs of the levies will instead fall mostly on overseas suppliers. Some economists have disputed the theory, however.

The nomination comes after Adriana Kugler abruptly stepped down as a Fed governor last week, prior to her term’s expiration date in January. Trump has said Miran will serve in the role temporarily, but hinted that it could be extended.