Recently, discussions around whether the Federal Reserve will cut interest rates have been widespread. However, as suggested by a series of "hawkish" officials led by Fed Chairman Jerome Powell, the market's expectations for a rate cut have significantly decreased. Nevertheless, a recent warning by J.P. Morgan President and COO Daniel Pinto remains startling, as he indicated that the Fed might not cut rates at all this year.
Many institutions' forecasts are based on the expectation of a rate cut this year, differing only in whether it will be in June or September, and how many cuts there will be. However, during an event in Washington this Thursday, the J.P. Morgan President expressed that the Fed might need more time to cut rates due to persistently high inflation.
Besides the timing of rate cuts, he also discussed the extent of the cuts. Given the stubborn inflation, which is unlikely to ease in the short term, the likelihood of the Fed cutting rates is extremely low, and premature rate cuts could potentially lead to an economic recession.
This series of pessimistic expectations stems from recent economic data, which shows that the current inflation in the United States is far higher than earlier predictions, more stubborn than many institutions had anticipated. This has led to even more pessimistic expectations for rate cuts, prompting various Federal Reserve officials to hint as much.
Recently, Fed Chairman Jerome Powell, Fed Vice Chairman Philip Jefferson, and the third-ranking Fed official, Williams, have all made consecutive "hawkish" statements. Their main point has been consistent: excessively high inflation means that more time is needed, making quick rate cuts unlikely.
Previously, J.P. Morgan CEO Jamie Dimon also expressed his view that sustained inflation pressure could likely delay rate cuts, potentially even beyond market expectations. His company has already prepared to accept this situation.
