JPMorgan said in a note, after Fed chairman Jerome Powell flagged a softer job market and the economic risks of the Fed moving too slowly to ease monetary policy.

In a speech at an economics conference in Philadelphia on Tuesday, Powell said the labor market had "demonstrated pretty significant downside risks." “Both the supply and demand for labor has declined quite sharply.”

The chairman also hinted at loosening monetary policy by ending its quantitative tightening, or bond reduction program, amid early signs of tightening in money markets.

Since 2022, the Fed has been trimming the amount of assets it holds on its balance sheet by allowing maturing assets to roll off its balance sheet. QT has seen the Fed’s balance sheet shrink from nearly $9 trillion at the height of pandemic to the current figure of about $6.59 trillion.

The Fed has said it plans to stop balance sheet runoff when reserves "are somewhat above the level consistent with ample reserves conditions," Powell said, adding that this point is approaching.

"We may approach that point in coming months and we are closely monitoring a wide range of indicators to inform this decision," Powell added.

Powell’s latest comments “solidified expectations for further rate cuts, starting at its next meeting Oct. 28-29," JPMorgan said in Tuesday note.

“While there was little doubt the Fed was angled to cut rates at its next meeting, today’s remarks were strong confirmation of that expectation,” it added.