JPMorgan Economists Now Predict Fed to Raise Rates in September

(Bloomberg) — JPMorgan Chase & Co. economists said they now expect the U.S. Federal Reserve to raise interest rates next September, becoming the latest on Wall Street to jettison a forecast for the central bank to stay on hold through 2022.

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In a new outlook published to clients late Wednesday, JPMorgan’s U.S. economists led by Michael Feroli said that by the middle of next year the central bank’s goal of full employment will be satisfied.

That will prompt the Fed’s policy-setting Open Market Committee to raise its benchmark rate from near zero in September with a further hike in December and one every subsequent quarter, the economists said. They predicted the increases will stop once the inflation-adjusted rate is back at zero.

“When the facts change, the FOMC changes its mind,” said Feroli and colleagues.

Economists are still sounding more dovish than investors. Goldman Sachs economists said last month that they expect the central bank to raise rates in July. Their counterparts at Morgan Stanley still see the Fed not shifting rates throughout next year.

The JPMorgan economists also said they believe Chair Jerome Powell will be reappointed for another four-year term by President Joe Biden.