Morgan Stanley Cuts Rate Expectations in Response to Hawkish Fed
Morgan Stanley revised its forecast for Federal Reserve interest rate cuts. Following the Fed’s hawkish December meeting, expectations for future cuts diminished.
Key Changes:
- No January Rate Cut: Morgan Stanley no longer anticipates a 25 basis-point cut in January 2025.
- Gradual Cuts Expected: Anticipated cuts limited to March and June.
- Higher Terminal Rate Forecast: Terminal rate projection raised to 2.6% for 2026.
Broader Market Analysis:
This cautious sentiment aligns closely with Goldman Sachs, reflecting persistent concerns over inflation and economic shifts, changing the landscape for aggressive monetary easing through 2025.
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