Morgan Stanley Adjusts Forecast, Expects Fed Rate Cut This Month
- Morgan Stanley now anticipates a 25 basis point cut in Federal Reserve interest rates at the December meeting.
- This marks a shift from their prior expectation of no change in rates for December.
- The revision was influenced by weaker U.S. economic data and supportive comments from Fed officials like Vice Chair John Williams.
- JPMorgan has also revised its forecast to predict a 25bps cut at this meeting, having previously expected no changes until early 2026.
- Traders are pricing in an 86.2% probability of a quarter-point rate cut at the upcoming FOMC meeting on December 9-10.
The upcoming FOMC meeting will see officials voting on potential rate cuts amid mixed signals regarding labor market support and inflation control measures. Recent hiring data suggests cooling labor conditions, which may bolster arguments for lower rates.
With Morgan Stanley projecting additional cuts in January and April, investors are closely monitoring these developments as they could signal shifts in monetary policy direction.(Source)
