TLDR
- JPMorgan executive Bob Michele suggests Fed may need emergency rate cut before May meeting
- Michele compares current market stress to historical crises (1987, 2008, 2020)
- US stock market lost over $5 trillion after Trump announced aggressive tariff policy
- Fed Chair Powell maintains the central bank isn’t rushing to adjust policy
- Michele warns vulnerable companies face higher borrowing costs, lower sales, and higher expenses
The Federal Reserve might be forced to implement an emergency interest rate cut before its scheduled May meeting, according to Bob Michele, Global Head of Fixed Income at JPMorgan Asset Management. Michele made these comments during a recent Bloomberg Surveillance interview as market volatility intensifies following President Trump’s new tariff announcements.
The US stock market has entered its third trading session after losing more than $5 trillion in just two days. This dramatic decline came directly after President Trump unveiled an aggressive tariff policy targeting imports from key US trading partners including Canada, Mexico, and China.
Michele described last week’s market chaos as exceptionally severe. He compared the current situation to three major historical crises: the 1987 stock market crash, the 2008 financial crisis, and the 2020 COVID-19 market downturn.
Historical Precedent Points to Urgent Action
In previous crises, the Federal Reserve acted swiftly with rate cuts to stabilize markets. Michele suggested current conditions may require similar quick intervention.
“I don’t know if they can even make it to the May meeting before they start bringing rates down,” Michele stated during the interview.
This urgency contrasts with the Fed’s current stance. Since Trump began his second term and announced potential new tariffs, Fed Chair Jerome Powell has consistently stated the central bank is not rushing to adjust its monetary policy.
Powell reinforced this cautious approach last Friday. He noted that Trump’s new tariffs would likely cause higher inflation and slower economic growth in the US.
Market Signals Growing Economic Concerns
The Fed has committed to maintaining inflation at a target rate of 2%. Powell’s statements indicate the central bank prefers waiting for clear signs of economic stress before taking action.
Michele criticized this wait-and-see approach. “They talked about the long, invariable lags. So now they’re saying they’re going to wait for the accident before they respond, and then wait for the long, invariable lags to take hold,” he said. “I don’t think so.”
He expressed doubt that the Fed could afford to wait until its upcoming meeting scheduled for May 7 to begin lowering rates. Michele believes the recent market drops signal deeper economic problems.
“I think if you step back and look at the totality of what’s going on, you cannot believe that there’s nothing under the surface that’s going to break,” Michele added.
Vulnerable Companies Face Multiple Challenges
Michele pointed to companies already struggling with debt as particularly at risk. These businesses now face a troubling combination of higher borrowing costs, lower sales, and higher expenses due to tariffs.
These underlying issues could worsen and potentially cause a major collapse if the Fed doesn’t take action soon. “This is a serious moment. I do not think the Fed can just sit on the side,” Michele warned.
Current market predictions show mixed expectations for Fed action. The CME FedWatch Tool indicates only a 34% chance that the Fed will lower rates at its May meeting.
Most market participants view a June rate cut as more likely, with odds around 98% according to the latest data. Traders are also pricing in potential rate adjustments at the November and December 2025 meetings.
President Trump has consistently called for lower interest rates. In January, he demanded immediate rate cuts, claiming better monetary policy was needed to support the economy.
As the Fed has maintained its interest rates while forecasting just two cuts for the year, Trump has encouraged the central bank to reduce rates to ease the economic transition to his tariff policies.
He continued to advocate for rate cuts ahead of Powell’s speech last week, stating it was a “perfect time” for the Fed to lower rates.
