Morgan Stanley Delays Fed Rate Cut Expectations to Next Year

Jin10 News, April 30 – Morgan Stanley stated on Wednesday that due to persistent U.S. inflation and resilient economic performance, the bank has abandoned its previous forecast for a Federal Reserve rate cut in 2026 and now expects rate cuts to begin next year. In its report, Morgan Stanley noted that inflation remains above the Fed's 2% target, and recent economic data indicates continued strength in growth and the labor market, reducing the urgency for further policy easing. The bank stated: "The threshold for rate cuts has been raised, and the Fed appears prepared to continue waiting." Policymakers are likely to adopt a cautious approach as they assess the lagging effects of prior policy tightening and the sustainability of the recent trend of declining inflation. Morgan Stanley predicts that as inflationary pressures more visibly subside and economic growth slows toward trend levels, the Fed will implement rate cuts in January and March of next year.