FILE PHOTO: A cyclist passes the Federal Reserve headquarters in Washington September 16, 2015. REUTERS/Kevin Lamarque/File Photo

By Rashika Singh

(Reuters) -J.P.Morgan now expects the U.S. Federal Reserve to cut interest rates by 25 basis points at its September meeting, citing signs of weakness in the labor market and uncertainty around President Donald Trump's latest Fed nomination.

The brokerage had earlier forecast one 25-basis-point rate cut in December but said in a note on Thursday that the risks now point to an earlier move, followed by three more quarter-point cuts before the Fed pauses.

"For (Fed chair Jerome Powell), the risk management considerations at the next meeting may go beyond balancing employment and inflation risks," J.P.Morgan analyst Michael Feroli wrote.

Trump on Thursday nominated Stephen Miran, chair of the Council of Economic Advisers, to fill a temporary seat on the Federal Reserve's governing board, replacing outgoing Governor Adriana Kugler. The White House, according to Trump, is actively looking for a candidate to serve in a permanent capacity when the 14-year Fed board seat becomes vacant on February 1, and is also considering potential replacements for Powell, whose term ends on May 15, 2026.

Miran's confirmation before the September 16–17 policy meeting remains uncertain, but JPM said his presence could increase divisions within the rate-setting committee.

The move follows Trump's repeated, but unsuccessful, attempts to pressure Fed policymakers to lower interest rates.

By appointing Miran to the central bank, even in a temporary role, Trump gains a potentially more direct path to influence monetary policy and exert sway over the world's most influential central bank.

The appointment could intensify internal divisions at the Fed, with JPM suggesting Miran's presence might lead to three dissents. BofA Global Research is anticipating at least one more dissent in September if rate cuts don't materialize, citing Miran's critical stance toward the central bank.

The Fed's decision may hinge on August jobs data. JPM said an unemployment rate of 4.4% or higher could justify a larger cut, while a lower reading may prompt resistance from policymakers focused on inflation.

Separately, the JPM note said that Fed Governor Christopher Waller is emerging as the frontrunner to succeed Jerome Powell as Fed Chair, a move it said would likely be welcomed by financial markets.

Analysts at Barclays echoed the sentiment, saying Waller's appointment would reduce uncertainty around how the Fed responds to economic data, which could support longer-dated bonds.

Traders now price in a 89.2% chance of a rate cut in September, compared with 37.7% last week, according to CME Group's FedWatch tool.

(Reporting by Rashika Singh and Joel Jose in Bengaluru; Editing by Mrigank Dhaniwala and Shailesh Kuber)