Morgan Stanley Adjusts Rate Cut Outlook as Fed Remains Wary of Inflation
- Morgan Stanley revised Fed rate cut forecasts to three 25-basis-point cuts in Q1-Q2 2025, abandoning a December 2025 cut amid persistent inflation and resilient labor markets. - The firm projects 100-basis-point easing in 2025 and a 25-basis-point cut in 2026, reflecting the Fed's cautious approach outlined in September's updated economic projections. - Strategic equity moves include downgrading rate-sensitive stocks like Corebridge Financial and Dell , while upgrading Nasdaq and Apollo Global Management
Morgan Stanley has updated its forecast for Federal Reserve interest rate cuts, dropping its earlier prediction of a cut in December 2025. The firm now expects three rate reductions to occur in January, April, and June of the coming year. This adjustment is based on the company’s latest evaluation of economic trends and monetary policy, as detailed in a recent commentary on bond strategy
The move away from a December cut is consistent with broader market trends, such as ongoing inflation and a labor market that has shown resilience even after recent data adjustments. Morgan Stanley’s report points to the Federal Reserve’s careful approach,
The firm’s updated rate projections come alongside several notable moves in the stock market.
On the other hand, Morgan Stanley
Morgan Stanley’s internal outlook also incorporates expectations for Fed policy. During a recent earnings call, MidWestOne Financial
Morgan Stanley’s recent strategic changes reflect a broader shift in risk assessment across different asset types. While the firm remains wary of sectors sensitive to interest rates, its upgrades in technology and financials show faith in underlying growth trends. As the Federal Reserve’s policy direction continues to evolve, investment strategies are being shaped by the ongoing challenge of balancing inflation management with economic stability.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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