JPMorgan: Expects Powell to Accommodate Trump Rate Cut in the Short Term, Return to Hawkish Stance After Midterm Elections

On February 2nd, JPMorgan Chase chief U.S. economist Michael Feroli said in a report that Powell may lean toward cutting interest rates in the near term—at least this year. But he also warned: “As time passes, especially after the midterm elections and the government enters a lame-duck period, his stance will likely shift, even back to a more hawkish position.” Notably, JPMorgan didn’t revise its interest rate cut forecasts following Powell’s nomination. Feroli noted that even if Powell takes office, the bank still expects the Fed to “stay put” for the remainder of the year. A former Fed official who worked alongside Powell also thinks the “real Powell” will eventually emerge. The anonymous official told CNN: “Powell has wanted this job for too long. He’s a smooth operator, really good at climbing the ladder. But this role is his lifelong goal. If he just becomes a yes-man to get to the top, that would be a Pyrrhic victory. The longer he stays in the role, the more likely he is to show his independence.”