JPMorgan Chase: Markets 'overly optimistic' about Fed rate cut

JPMorgan Chase's macro strategy team said that financial markets may be too optimistic about the speed of the Federal Reserve's easing of policy through interest rate cuts this year, and the key areas of inflation that the Federal Reserve closely tracks have not yet shown obvious signs of deflation. They said the Fed's commitment to fighting a potential rebound in inflation remains undervalued, opening the door to a correction in risk assets. Rate cut expectations previously became common as inflation eased in 2023 and the Federal Reserve signaled a shift toward lower rates at its December meeting. Traders are expecting a rate cut of 140 basis points this year, according to data in the federal funds futures market, nearly twice the amount shown in the Fed's December rate forecast chart, known as the dot plot. (CoinDesk)