Catenaa, Thursday, September 18, 2025- JPMorgan Asset Management cautioned investors that the Federal Reserve’s expected interest-rate cut could pose significant risks for stocks, bonds, and the U.S. dollar if perceived as politically motivated.
In a note from chief global strategist David Kelly, the bank warned that easing driven by pressure from the Trump administration may undermine confidence in the Fed’s independence.
The Federal Open Market Committee is widely expected to reduce the benchmark Federal Funds Rate by a quarter point this week, aiming to support a weakening labor market.
The CME Group FedWatch Tool estimates a 96.1% probability of a 25-basis-point cut. Economists have highlighted the trade-off between lower unemployment and higher inflation, with some questioning the timing of the cut amid rising price pressures.
Kelly noted that markets have grown “frothy” and easing could ultimately weaken demand, delivering negative effects for equities, bonds, and the dollar.
He emphasized that inflation could rise 1.2 percentage points above target by year-end, while unemployment remains stable at just 0.3 points above the Fed’s goal, raising doubts about the necessity of an immediate cut.
Recent political developments have intensified scrutiny on the Fed. Stephen Miran secured Senate approval to join the Fed Board of Governors ahead of the FOMC meeting, while Governor Lisa Cook retains her post after a court blocked President Trump’s attempt to remove her.
JPMorgan and other strategists urge investors to diversify and adopt a cautious stance amid potential volatility.
