JP Morgan clarifies its expectations for Federal Reserve movements according to the results of the U.S. elections.

On Monday, American investment bank JP Morgan & Chase issued a memo to clients, in which the bank's analysts outlined their expectations for movements in interest rates at the U.S. Federal Reserve in light of the upcoming American elections, set to begin today at 7 a.m. Eastern Time.

According to the memo, JP Morgan believes that the Federal Reserve may halt interest rate cuts if Trump wins, as the bank’s asset management expert indicated that he expects the Federal Reserve to lower interest rates this week, but not in the December meeting if Trump wins.

The JP Morgan analyst stated that he expects higher interest rates during a Trump presidency if he wins tomorrow, citing the more expansionary fiscal policies he is likely to adopt.

JP Morgan's comments on the matter were as follows:

First: If Trump wins:

• If a Republican landslide occurs with Trump's victory, the United States will witness much more expansionary fiscal policies, and possibly a trade war due to Republican tariffs, along with a larger budget deficit, leading to higher interest rates.
• Regarding the Federal Reserve, JP Morgan believes that if it appears that fiscal policy will contribute to the deficit, add to financial stimulus, and thus add to inflation, the central bank may feel compelled to take this into account and slow down monetary easing.

Second: If Harris wins:

• In the case of Harris winning, JP Morgan states that if the government is divided, for example, due to Harris's victory, the economy is expected to continue growing at its slow and tedious pace, as he puts it, likely maintaining the current situation.
• The Federal Reserve is likely to adhere to its dot plot in its guidance on lowering interest rates until the economy shows that it has reached the appropriate neutral interest rate.

However, regardless of the winner, JP Morgan still expects a 25 basis point rate cut by the U.S. Federal Reserve at the Federal Open Market Committee meeting in November.