J.P. Morgan Strategist David Kelly Discusses 2026 Inflation Outlook and Fed Rate Cut Expectations

On December 13, 2025, J.P. Morgan Asset Management Chief Global Strategist David Kelly discussed the Federal Reserve’s recent 75 basis points rate cuts (September–December 2025) and 2026 inflation outlook on Barron’s Roundtable [4]. While the exact transcript is unavailable, his views align with JPMorgan’s official 2026 outlook: inflation expected to settle at 2.25–2.5% (with brief early re-acceleration) and 2–3 quarter-point Fed rate cuts in 2026 [1].

Market reaction to the Fed’s December 10 rate cut (to 3.50–3.75% [0]) was mixed: initial gains on December 11 reversed on December 12 due to Fed dissent (9-3 vote) and cautious guidance [0]. JPMorgan stock closed at $318.52 on December 12 (-0.36% intraday) but showed a slight real-time rise to $318.58 (+0.38%) on December 13 [0]. The firm’s bullish S&P 500 target (7,500–8,000 in 2026) relies on anticipated rate cuts and sustained earnings growth [2].

1. Kelly’s comments reinforce JPMorgan’s base case for moderate inflation and gradual monetary easing in 2026 [1][3].
2. Post-rate cut market volatility reflects investor uncertainty about the Fed’s policy path amid internal dissent [0].
3. The 7,500–8,000 S&P 500 target implies potential equity upside if rate cuts and inflation trends materialize [2].
4. Delayed economic data (CPI, labor market) due to a government shutdown increases forecast uncertainty [0].

• Risks
  :
  • Fed dissent signals policy uncertainty, which could spark market volatility if future cuts deviate from expectations [0].
  • Early 2026 inflation re-acceleration could prompt the Fed to pause cuts, conflicting with market sentiment [1].
  • Delayed data makes underlying economic conditions harder to assess [0].
• Opportunities
  :
  • Cyclical sectors, small caps, and financials may benefit from cooling inflation and rate cuts [1].
  • Equity investors could capitalize on the bullish S&P 500 target if earnings growth remains resilient [2].

• Fed Funds Rate (post-December 10 cut): 3.50–3.75% [0].
• JPMorgan 2026 inflation forecast: 2.25–2.5% [1].
• Expected 2026 Fed rate cuts: 2–3 [1][3].
• December 12 market performance: S&P 500 (-0.86%), NASDAQ (-1.25%), Dow (-0.53%) [0].
• JPMorgan stock: Closed at $318.52 on December 12; rose to $318.58 on December 13 [0].
• S&P 500 2026 target: 7,500–8,000 [2].