JPMorgan brings forward its Fed rate hike call from the second half of 2027 to December 2026

JPMorgan has changed its forecast and now expects the Federal Reserve to deliver a quarter of a percentage point rate hike in December 2026, bringing forward its previous call for an increase in the second half of 2027. Reuters reported on Thursday, 30 July 2026 (8 Mordad 1405), that the revision followed the US central bank's decision to leave policy rates unchanged at its July meeting.

In a note on Wednesday, 29 July, JPMorgan said remarks by Federal Reserve Chair Kevin Warsh cast doubt on his credibility in delivering lower inflation. Warsh reaffirmed the central bank's commitment to bringing inflation down but offered few clues about the policy steps required, with inflation having stayed above the 2 percent target for more than five years. The bank added that such uncertainty could increase the urgency for the rest of the committee to act on its mandate. The decision to hold drew dissent from 3 of the 12 members of the Federal Open Market Committee, who favoured a quarter point increase.

JPMorgan expects the Fed to hold rates at 3.75 to 4.00 percent after the December hike, adding that the risk of a September increase remains on the cards if inflation continues to heat up. According to CME Group's FedWatch tool, markets are pricing a 65.2 percent chance of a September hike, down from 81 percent before the policy statement. Other brokerages disagree: Goldman Sachs and Barclays still expect rates to stay unchanged through the end of the year, Bank of America forecasts three hikes starting in September, and Citigroup maintains its call for cuts in October and December this year and one more in January 2027. The Federal Reserve's rate path feeds through the value of the dollar into the global gold price, and from there into Iran's gold and coin market.