• The Federal Reserve is expected to cut its policy rate by 25 basis points next week, lowering the target range to 4.0–4.25%.
  • JPMorgan's chief economist anticipates two or three dissenting votes, likely arguing for a larger cut, but none for holding rates steady.
  • The Fed's "dot plot" is projected to signal just one more rate cut beyond 2025, indicating a measured and cautious easing path.

JPMorgan's chief economist, Michael Feroli, expects the Federal Reserve to lower its benchmark interest rate by a quarter percentage point at its upcoming meeting, a move largely anticipated by markets following recent signs of labor market softening and subdued inflation.

The cut would bring the target range down to 4.0–4.25%, providing modest support to a slowing economy. The expectation is built upon a weaker-than-expected jobs report and a recent inflation reading that showed prices ticking up just 0.2% month-over-month, figures that have given policymakers room to ease monetary policy.

According to people familiar with the matter, the decision may not be unanimous. Feroli's forecast includes the likelihood of two or three dissenting votes on the Federal Open Market Committee. These members are expected to argue for a more aggressive 50 basis point cut, though no votes are anticipated in favor of holding rates at their current level. This internal debate highlights the delicate balancing act the Fed faces as it navigates shifting economic data.

The accompanying update to the committee's "dot plot," which charts individual members' rate expectations, is also in focus. It is expected to show a median projection for only one additional rate cut beyond 2025, signaling a slower and more deliberate easing cycle than some market participants might hope for. This would suggest policymakers are leaning towards a gradual approach, wary of reigniting inflationary pressures.

A spokesperson for JPMorgan declined to comment beyond the published research. The Fed itself does not comment on market expectations ahead of its policy meetings.

The anticipated pivot has already prompted a shift in investment strategies. Advisors are reportedly moving allocations out of cash and ultra-short duration bonds and into equities and intermediate-term bonds, betting that a lower rate environment will boost the appeal of these assets. The broader market consensus now prices in at least two cuts for 2025.

Correction: An earlier version of this article misstated the expected number of dissents; it is two or three, not one or two.