Benzinga·2025-11-28 09:00Core Viewpoint - JP Morgan and Goldman Sachs have adjusted their interest rate forecasts, now predicting a quarter-point cut by the Federal Reserve after its upcoming meeting on December 9-10 [1][2]. Group 1: JP Morgan's Shift in Outlook - JP Morgan has reversed its earlier stance of pausing rate cuts until January, influenced by recent comments from central bank officials [2]. - Chief U.S. economist Michael Feroli indicated that the latest communications from the Fed increase the likelihood of a rate cut in the near term [2]. - The bank had previously retracted its December forecast due to volatility in September's job data but has now reinstated its outlook [3]. Group 2: Goldman Sachs' Agreement - Goldman Sachs has aligned with JP Morgan's revised forecast, suggesting that previous employment reports may have solidified the expectation of a 25 basis points cut [3]. Group 3: Fed Officials' Signals - New York Fed President John Williams has indicated that current monetary policy is "modestly restrictive" and sees potential for further adjustments to achieve a neutral stance [3]. - Williams noted that inflation has stalled around 2.75%, while the labor market has returned to pre-pandemic conditions, with increased downside risks to employment [4]. Group 4: Market Sentiment - Market sentiment reflects a strong belief in a rate cut, with traders pricing in an approximately 84.7% chance of a cut according to CME Group's FedWatch tool [5]. - Despite some internal disagreements within the Fed, the consensus appears to favor a standard cut to mitigate economic harm [6]. Group 5: Market Reactions - Following the Thanksgiving holiday, major indices such as Dow Jones, S&P 500, and Nasdaq 100 saw positive trading, with the SPDR S&P 500 ETF Trust (SPY) up 0.69% and Invesco QQQ Trust ETF (QQQ) up 0.88% [6][7].