3 days Ago
Andrii Yalanskyi The Federal Reserve looks ready to deliver a larger-than-standard sized half-point rate cut this week alongside signaling to the markets more easing is in the pipeline, J.P. Morgan’s head of global research said.
While market debate is still running over whether the Fed will cut its benchmark rate by 50 basis points or by a smaller 25 basis points on Wednesday, J.P. Morgan’s Joyce Chang said investors she’s speaking to are more focused on the broader economic picture.
“We're still sticking with the 50 basis points call ,” Chang on Monday told Bloomberg TV , which noted the firm’s economists were among the last ones tracked by Wall Street to hold on to that call. Fed policymakers "have the scope to make this rate cut right now,” she said, and “doing more would probably send the right signal,” Chang said. “Waning” upside pressure on inflation from the labor market and the current level of restrictiveness in monetary policy make it an ideal time for the Fed to cut by 50 basis points this week, Chang said.
The firm’s economists also currently expect a half-point rate cut in November and a quarter-point cut in December. The Fed opting for a 50bp rate cut on Wednesday would open questions about the outlook for the economy, with Fed Chair Jerome Powell indicating policymakers are monitoring slowing in the labor market. “The sense is recession risk – it could be out there later in 2025, in the second half of the year, but it's not imminent right now,” Chang said.
She said she’s not as worried about the labor market as others because household surveys are showing consumer demand remains, and that there's “not a lot of job shedding” happening. “The Fed's tone, no matter what, I think is going to be relatively dovish,” this week, said Chang, who said policymakers may go with a 25bp reduction. Here are some ETFs tracking large-cap equity indexes: ( SPY ), ( VOO ), ( IVV ), ( QQQ ), ( QLD ), ( DIA ), ( DDM ), and ( DOG ).
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