J.P. Morgan shifts to hawkish Fed rate forecast after Warsh's ambiguous remarks

Published Aug 1, 06:03 AM UTC

J.P. Morgan abruptly shifted its Federal Reserve interest rate forecast to a hawkish stance following Chairman Kevin Warsh's ambiguous post-meeting press conference on July 29, 2026. The FOMC voted 9-3 to hold rates steady at 3.75%-4.00%, but bonds sold off sharply, pushing the 30-year Treasury yield to 5.22%. J.P. Morgan Chief U.S. Economist Michael Feroli now expects a 25-basis-point rate hike in December 2026, rather than in the second half of 2027, citing Warsh's lack of a coherent inflation strategy. The article notes that Warsh deflected questions on how to achieve the 2% inflation target, which has been missed for 63 months, and that the Fed's dual mandate of full employment and price stability remains under pressure from energy shocks and Middle East conflict.