ICYMI: Morgan Stanley forecasts two 25-basis-point rate 2025 cuts, September then December

7 months ago 30

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Morgan Stanley’s forecast adds weight to expectations of imminent Fed easing, reinforcing dollar downside risks and supporting equities.

Morgan Stanley has shifted its Fed outlook, joining other analyst firms in forecasting a September rate cut.

Justin had the news earlier:

Fed to cut rates twice by year-end now - Morgan Stanley

The change follows Powell’s Jackson Hole emphasis on labour market risks, a notable departure from his earlier focus on stubborn inflation and strong employment. The bank now expects two cuts this year — September and December — followed by steady quarterly 25bp reductions through 2026, bringing rates down to 2.75–3.0%.

This marks a major shift from its previous view that policy would remain on hold until March 2026 before easing more aggressively.

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