JPM US FOMC preview 1

J P M O R G A N North America Economic Research 24 July 2026

We expect the FOMC will leave rates on hold at the end of next week’s meeting. Economic and Policy Research However, we think it will be a contested decision as some on the Committee are Michael Feroli losing patience with above-target inflation, and we look for at least two hawkish ( dissents (Hammack and Logan). There are no dots or SEP set to be released next week, and it will be interesting to see if the statement evolves, as it has done for JPMorgan Chase Bank NA

much of this century, or whether it is effectively written afresh each meeting. If the former, then we wouldn’t foresee many meaningful changes, as there have only been modest changes in the narratives on employment and inflation since the last meeting. We think there is a chance the Committee will use the statement to indicate it understands that action may be needed to back up its resolve. We have modest expectations for learning much from the post-meeting press conference. At his recent Congressional testimony, Chair Warsh could again only describe his views on current economic developments with very broad talking points. The discount rate requests in the implementation note may provide some further information on the views of non-voting FOMC participants.

There are sound arguments for hiking and holding next week, with the difference usually coming down to one’s inflation forecast. We think the strongest case for holding next week is that a hike would send a confusing signal about how the Fed responds to data. The Committee voted unanimously at the last meeting to keep rates on hold. Since then, we’ve had one inflation reading, and the core measure was the softest in years. Eschewing forward guidance is uncontroversial in contemporary thinking about monetary policy provided the public has an understanding about how policy reacts to developments. No forward guidance combined with an unstable reaction function would be concerning.

We believe influential members of the FOMC are also inclined to give inflation more time to come down. Governor Waller perhaps received the most attention last week when he remarked that “If we get another hot reading on core inflation this week, then the FOMC will need to consider tightening monetary policy in the near term.” The subsequently very cool CPI, and maybe lukewarm PCE, readings for June suggest Waller is now not on edge to hike. Less noticed, Vice Chair Jefferson spoke after the CPI release, noting that he supported the June decision to leave rates on hold and added that “This policy stance should continueto support the labor market while allowing inflation to resume its decline toward our 2 percent target.” [emphasis added]. It wasn’t a dovish speech, to be sure, as he added that if inflation doesn’t start to cool soon, it would be appropriate to raise rates. Also speaking after the CPI, Governor Cook similarly remarked that “At this juncture, I see it as prudent to give a bit more time to observe how inflation unfolds from here.” We haven’t received recent economic updates from Governors Barr, Bowman, and of course Powell, but we’d guess they align with their Board colleagues who have shared their views publicly. The other notable Fed speaker was NY Fed President Williams, who gave perhaps the most dovish remarks; while noting his inflation worries, he also presented a list of six reasons to expect inflation to move lower.

With the rest of the Board and the NY Fed President inclined to show some patience, we think it would require an impassioned case by the Chair to get to a hike. We’ve consistently argued that the FOMC isn’t a dictatorship, and that the power

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Michael Feroli North America Economic Research ( July 2026 JPMORGAN

of the Chair is limited by law and tradition. However, in close calls, some deference will likely be given to the Chair. That’s a risk factor, but we also think the Chair will give some reciprocal deference to his Board. Finally, we’ve seen four Fed Chair transitions, and each time we’ve heard an analogy about the need to be extra tough on your first day in jail to establish…