Key takeout
The Fed faces pressure to consider cutting emergency rates amid the market turmoil. Jpmorgan’s Bob Michele has raised the flag that businesses are putting a burden on.
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In a recent interview with Bloomberg Surveillance, Bob Michele, global bond head at JPMorgan Asset Management, said the Federal Reserve may need to implement emergency rate cuts before it is scheduled for May due to severe market stress.
The US stock market is taking part in its third trading session after losing more than $5 trillion just two days after President Trump announced his aggressive tariff policy.
Michele said the market chaos last week was very serious, comparable to the stock market crash of 1987, the financial crisis of 2008 and the Covid-19 market slump in 2020.
In previous crisis, the Fed acted swiftly by making decisions to cut interest rates. Michele suggested that current market conditions could require similar interventions. This means the Fed may not be able to wait until May to cut fees.
“I don’t know if they’ll even be able to reach the May meeting before they lower interest rates.”
Since Trump began his second term and threatened tariffs on imports from major US partners such as Canada, Mexico and China, Chairman Jerome Powell has repeatedly said that the central bank is not in a hurry to coordinate its policies.
In a statement last Friday, Powell reiterated his cautious attitude towards adjusting the Federal Reserve’s fees.
He stressed that Trump’s new tariffs are likely to cause higher inflation and slower economic growth in the United States. The Fed is working to lock inflation at a 2% rate.
Michele commented on his current stance that the Fed is waiting for clear indications of economic stress, and doubted that the central bank could wait until it begins to cut prices until it is scheduled for May 7th.
“They talked about long, constant delays, so now they say they’re going to wait for an accident before they respond, then wait for the long, constant delays to take hold,” he said. “i don’t think so.”
Analysts are critical of the idea that the Fed will wait for damage and wait for its policy to take effect.
Addressing the argument that there is no evidence of a systematic breakdown yet, Michele said the recent market shows deep economic problems, particularly in underrated companies.
“If you take a step back and see what’s going on, I don’t think it’s possible that there’s anything broken underneath the surface,” added Michele.
Michele also notes that vulnerable companies already suffering from debt are currently facing increased borrowing costs, reduced sales and higher cost packages. These underlying issues can get worse and lead to major collapse if the Fed does not take action.
“This is a serious moment. I don’t think the Fed can just sit by the side,” Michele said.
The CME FedWatch tool shows that the Fed is only 34% likely to lower prices at its May meeting.
Although this figure is fluctuating, the majority of market participants believe that the rate cuts are likely to be reduced in June, with an odds of around 98% as of the latest data.
Traders will also be priced at the Federal Reserve’s meetings in November and December 2025.
Trump has continued to urge the Fed to cut interest rates. In January, the president quickly called for lower interest rates and argued that better monetary policy was needed to support the economy.
As the Fed maintained interest rates and projected two cuts that year, Trump encouraged central banks to cut interest rates to facilitate his economic transition to tariff policies.
He continued to defend interest rate cuts ahead of Powell’s speech last week, saying the Fed is “the perfect time” for lower rates.
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