Morgan Stanley Confident: No Fed Rate Hikes This Year, But Two Major Warning Signs Emerge

According to a report by Golden Finance, on June 27, Morgan Stanley maintained its forecast that the Federal Reserve will keep interest rates unchanged through the end of the year. However, the firm warned that if the unemployment rate falls below 4% or inflation remains elevated, the Fed may be forced to reconsider rate hikes. In a report sent to clients, Morgan Stanley's Chief U.S. Economist Michael Gapen stated that data received since the June Federal Open Market Committee meeting has made him “slightly more assured” about the baseline prediction of no rate hikes. He cited reasons such as the drop in oil prices following the U.S.-Iran memorandum of understanding and the anticipated end of tariff pass-through effects.