JPMorgan now expects the Federal Reserve to raise interest rates in December 2026, significantly earlier than its previous forecast for a hike in the second half of 2027.

Michael Feroli, JPMorgan’s chief U.S. economist, said Fed Chair Kevin Warsh once again failed to explain clearly how he intends to deliver on his forceful commitment to bring inflation under control.

Feroli also noted that Warsh raised questions about whether the Personal Consumption Expenditures Price Index would remain the benchmark for the Fed’s 2% inflation target. Together, these concerns could undermine confidence in the new chair’s ability to deliver lower inflation.

That uncertainty may create a greater sense of urgency among other members of the Federal Open Market Committee, encouraging them to support a rate increase to defend the central bank’s inflation-fighting credibility.

Feroli stressed that JPMorgan’s revised forecast should not be interpreted as an attempt by financial markets to pressure the Fed. Instead, it reflects another challenge facing the central bank: demonstrating through concrete action that it remains committed to preserving its credibility.