JPMorgan Reverses View, Now Sees Fed Cutting Rates in December

On November 26, 2025, economists at JPMorgan Chase & Co., led by Chief U.S. Economist Michael Feroli, revised their forecast and said they now expect the Federal Reserve to cut interest rates in December 2025 rather than in January. The bank cited recent public commentary from senior Fed officials—most notably New York Fed President John Williams—as a key factor prompting the change. The move represents a swift reversal of JPMorgan’s brief prior call that easing would wait until January and prompted fresh market attention to the timing of the Fed’s next policy move. The decision tightens the calendar for investors and policymakers ahead of the Fed’s year-end communications.

Key Takeaways

• JPMorgan economists, led by Michael Feroli, announced on November 26, 2025 that they now expect a Federal Reserve rate cut in December 2025, reversing an earlier January projection.
• The revision was driven in part by public remarks from New York Fed President John Williams that markets and strategists interpreted as supportive of near-term easing.
• The change came after a short interval in which JPMorgan had signaled a January move; the new stance compresses expected timing by roughly one month.
• Market participants reacted quickly to the updated call, with rates-sensitive instruments and futures repricing nearer-term easing prospects (market moves referenced in public trading data following the announcement).
• JPMorgan’s note is a forecast revision, not an official Fed decision; the Fed’s formal policy choice will depend on incoming economic data and committee deliberations.

Background

Since the peak of the tightening cycle in 2022–2023, the Federal Reserve has been navigating a gradual transition from restrictive policy toward a stance consistent with sustained price stability. Inflation readings have moderated from their highs, but labor-market tightness and services inflation kept policymakers cautious through much of 2024 and 2025. Throughout 2025 the market tracked a sequence of potential rate cuts as inflation signaled deceleration and growth indicators softened. Major banks and research desks, including JPMorgan, have periodically updated their timing calls as Fed speakers and economic releases altered the balance of risks.

JPMorgan had briefly signaled a January cut in its published outlook before the most recent note led by Feroli. That brief prior view reflected caution that the Fed would wait for clear, consistent evidence of inflation convergence. Federal Open Market Committee (FOMC) members have varied in emphasis—some stressing patience, others noting improved inflation momentum—which has left timing open to reinterpretation after each round of public comments and data releases. The New York Fed, led by John Williams, holds an influential platform: comments from its president often carry extra market weight because of his role in the regional system and monetary-policy discussions.

Main Event

On November 26, 2025, JPMorgan’s economics team published a note revising the expected date of the first Fed rate cut from January to December. The team explicitly cited recent Fed commentary as a principal input that shifted their probability assessment toward an earlier move. The revision is framed as a probabilistic reweighting—JPMorgan did not assert certainty but moved December to the peak probability window for the first cut.

Markets responded to the note and related Fed commentary by tightening the timeline for expected policy easing. Short-dated rate futures and options reflected increased odds of a December decision, and traders adjusted positioning across fixed-income and currency markets. Market repricing after the note underscores how closely participants watch both private-sector forecasts and public signals from Fed officials when forming near-term rate expectations.

The bank’s shift illustrates how central-bank communication can change private-sector expectations quickly. JPMorgan’s team emphasized that the underlying macro outlook—progress on inflation and slowing growth—remains the central determinant; the timing change follows an interpretation that rhetoric from key Fed officials has become more open to earlier easing. JPMorgan also noted the potential for incoming data to reverse course, and the note framed the December call as conditional on the persistence of current trends.

Analysis & Implications

A JPMorgan revision from January to December compresses the policy timeline and increases the near-term sensitivity of financial markets to economic releases. If the Fed does cut in December, it would accelerate the normalization of monetary conditions relative to many mid-2025 expectations, with immediate implications for borrowing costs on mortgages, consumer credit and corporate funding. Banks and lenders that hedge rates short-term may need to reassess hedging and loan-pricing strategies if the market now prices a nearer easing path.

For the Fed, a December cut would also carry communication and credibility implications. Moving earlier than some forecasts anticipated would suggest policymakers judged that inflation momentum and economic slack warranted prompt easing. Conversely, if incoming data diverge—by showing renewed inflationary pressure or stronger-than-expected employment—expectations could re-flip, increasing volatility. Policymakers must weigh the benefits of preemptive easing against the risk of appearing reactive to market pressure.

Internationally, an earlier Fed cut could influence capital flows and currency valuations, easing dollar strength and potentially relieving some strain for emerging-market borrowers with dollar-denominated debt. Central banks abroad may reassess their own stances in response to a U.S. pivot, although domestic conditions will still drive most foreign policy choices. Overall, the shift underlines how public comments from influential Fed officials can materially alter the timing priced by markets and analysts.

Comparison & Data

The table shows the discrete shift in JPMorgan’s timing and the stated proximate reason for the change. JPMorgan frames both forecasts as conditional: each depends on subsequent data and Fed deliberation. The bank’s update narrows the window between private-sector expectation and the policy calendar, increasing the information value of incoming macro releases and Fed communications in late November and December.

Reactions & Quotes

“We now see the highest probability of the first Fed cut in December 2025,”

JPMorgan economists, note led by Michael Feroli

“Recent public remarks have shifted the balance of risks toward earlier easing,”

John Williams, President, Federal Reserve Bank of New York (characterization of public comments)

Both items above reflect short public statements and paraphrased characterizations provided in analysts’ notes and officials’ speeches. Market participants cited the JPMorgan note and Fed commentary when repricing futures and adjusting risk exposure in the hours after publication.

Unconfirmed

• Whether internal JPMorgan models or private discussions with Fed staff were part of the decision to shift from January to December—public documentation cites only analyst notes and officials’ remarks.
• Whether the Fed will act in December remains conditional; the JPMorgan call is a probabilistic forecast, not confirmation of a Fed decision.
• The exact wording and intent behind some Fed comments interpreted as supportive of an earlier cut have nuances that may not fully indicate committee consensus.

Bottom Line

JPMorgan’s November 26, 2025 revision—led by Michael Feroli and prompted by public commentary from officials such as John Williams—moves the expected first Fed rate cut from January to December 2025. This adjustment tightens the window for markets and raises the stakes for late-November and December economic data releases. Investors should treat the call as a conditional probability update rather than an assured outcome; policy decisions will still hinge on incoming inflation and employment information and the FOMC’s deliberations.

Readers tracking policy should watch the Fed’s pre-December communications calendar, key economic prints (notably inflation readings and payrolls), and any further signals from voting and non-voting Fed officials. The next several weeks are likely to determine whether markets’ and banks’ compressed timing forecasts are realized or reversed.

Sources

• Bloomberg — news report summarizing JPMorgan’s note and Fed commentary (news)