Episode summary
Fed has More Cuts Ahead, but 'There's No Urgency' Right Now, Says Priya Misra
Bloomberg Surveillance
· · 6 min · Guests: Priya Misra
Summary
Priya Misra said the Fed has preserved flexibility by keeping “optionalty” after its latest move, which she reads as a signal that further cuts are possible but not urgent. She expects a couple more cuts over the next six months as the Fed works toward neutral, while saying the central bank can move faster if the labor market weakens and unemployment rises.
On inflation, Misra placed Chair Jerome Powell and Chicago Fed President Austan Goolsbee on different sides of the debate: Goolsbee is in the inflation camp, while she thinks the details of inflation and wage inflation are still trending lower. That split, she argued, explains why Fed officials are weighting labor-market risk and inflation risk differently heading into 2026.
Misra was constructive on credit, saying spreads are tight for good reason and that fundamentals remain solid even amid heavy issuance. She acknowledged concern around large debt-financed deals, including corporate buyouts and bridge loans, but said high all-in yields still make borrowing far from free money. JPMorgan Asset Management is keeping cash ready for January supply, which she views as a potential buying opportunity.
She also described the economy as still in a soft landing, supported by strong balance sheets and resilience to shocks this year. Her main caution is the labor market: if hiring stays weak and layoffs rise, she thinks that would eventually force the Fed into a more aggressive easing cycle.
Key takeaways
- Misra expects a couple more Fed cuts by the time policy reaches neutral, but says there is "no urgency" and the Fed can wait up to six months.
- She thinks the labor market is the key risk; if unemployment keeps rising, she expects the Fed to become "a lot more aggressive."
- Misra says inflation and wage inflation are still heading lower, putting her closer to the dovish camp than Goolsbee on 2026.
- She is not worried about credit fundamentals, but expects January supply to create an opportunity for buyers.
- JPMorgan Asset Management remains constructive on a soft landing and sees resilient company and consumer balance sheets underpinning growth.
Notable quotes
“So they created the optionality that if the data is weak, particularly on the label front, that they can absolutely cut more”
“But there's no urgency. So they can cut this, you know, over the next six months”
“I think President Goolsbee is probably in the inflation camp, you know, sort of worried that inflation has not seen much progress this year”
“We think we're in a soft landing. We've been in one for the last two years”
“I am a little concerned about the labor market. Okay. I'm not hearing companies saying that they're going to increase hiring”
How the episode opens
So I think what the Fed did brilliantly was to retain optionality. So we have a lot of data coming up next week. We're also going to get another payroll report before the next gen meeting.
So they created the optionality that if the data is weak, particularly on the label front, that they can absolutely cut more. But they did sort of signal to the bar to cut any further is higher. So, you know, and I think and, you know, you you referenced President Goolsbee.
I think there's a division of the Fed because the risks to the labor market and the risk to inflation are both high and different. Fed officials are putting more emphasis on one risk list is another. I think President Goolsbee is probably in the inflation camp, you know, sort of worried that inflation has not seen much progress this year.
On our end, we think that inflation, if you look at the details of inflation, so this inflation is heading lower, wage inflation is heading lower. So in our base case, we do see a couple more cuts, you know, by the time the Fed actually reaches neutral. But there's no urgency.
So they can cut this, you know, over the next six months. Of course, if the labor market is weak and that unemployment rate and that's what we're watching, if that continues to move higher, I think this Fed is going to be a lot more aggressive. Yeah, And Powell even signaled that, right, that the labor market, he was saying and not so many words is probably weaker than we think it is.
And also we're dealing with backward looking data at the moment. So we're still waiting again for that more data to come in. But we know that credit spreads are tight.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed rate cuts 2026
- bond etf outlook
- inflation progress
- labor market weakness
- regional fed dissents
Companies and tickers mentioned
- JPM
- JPMorgan Asset Management
Watch the episode
Watch “Fed has More Cuts Ahead, but 'There's No Urgency' Right Now, Says Priya Misra” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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