JPMorgan: Two factors hinder the Federal Reserve from starting interest rate cuts, and final decisions often lag behind economic conditions.

[JPMorgan Chase: Two major factors hinder the Fed from starting to cut interest rates, and the final decision often lags behind the economic situation] JPMorgan Chase pointed out that when the Fed is torn by conflicting macroeconomic data, its final decision often lags behind the situation. Trump is increasingly eagerly calling on the Fed to lower interest rates, but the Fed is in a tough position. JPMorgan analysts said there was little chance of a rate cut as the Fed kicked off its May policy meeting this week, and the likelihood of a rate cut at a follow-up meeting was also low. JPMorgan Chase & Co. believes that Fed officials are constrained in monetary policy for two reasons. One reason is that rising inflation expectations make it difficult for the Fed to start cutting interest rates. The latest consumer inflation report showed that inflation rose 2.4% year-on-year in March, above the Fed’s 2% target. This figure is still quite low compared to what is likely to happen in the future: the one-year inflation expectation compiled by the University of Michigan is 6.5%. Trump’s tariff policy is expected to increase costs for consumers, which is the main driver of a sharp rise in inflation expectations. Fears of the trade war have heightened the risk of stagflation, the possibility of a situation in which the U.S. economy will stagnate growth and prices will continue to rise. In this case, the Fed is effectively in a dilemma because it cannot deal with both at the same time. The second reason is that macroeconomic data has not yet shown the necessity for a drop in interest rates. Currently, encouraging data masks the issue of inflation expectations, and macroeconomic data continues to remain robust, even showing relatively strong performance in some aspects. The unexpectedly positive April non-farm payroll report from last Friday boosted investor confidence and drove the stock market higher. In other words, the market is not pricing in an impending recession. Analysts at JPMorgan wrote: The current forward P/E ratio of the S&P 500 index (SPX) is 21 times, with earnings per share (EPS) expected to grow by 10% this year and 14% next year. This hardly reflects any significant concerns about a recession.