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JPMorgan projected that the US Federal Reserve will raise interest rates by 25 basis points this coming December, advancing its previous forecast of a rate hike in the second half of 2027. This comes after the central bank kept interest rates unchanged during its July meeting.

Fed Chair Kevin Warsh affirmed the central bank's commitment to bringing down inflation, yet offered limited signals regarding the monetary policy steps needed to contain price pressures, which have remained above the Fed's 2% target for over 5 years.

In a note released on Wednesday, JPMorgan stated that Warsh's remarks raised doubts about the new Fed Chair's ability to lower inflation, adding that this might increase the need for the rest of the committee members to act in order to fulfill their mandate.

The widely expected decision to hold interest rates steady came amid dissent from 3 of the 12 members of the Federal Open Market Committee (FOMC), who favored a 25-basis-point rate hike.

Despite the rise in core inflation through last month—driven by higher fuel and food prices, as well as robust corporate spending linked to artificial intelligence—Warsh did not consider a rate hike to be necessarily the right choice.

JPMorgan expects the Fed to keep interest rates in a target range between 3.75% and 4% following the December hike, adding that the possibility of a September rate increase remains on the table if inflation continues to climb.