Morgan Stanley expects the Federal Reserve to cut rates by 0.25% in each of the next four meetings

Zhitong
2024.11.19 02:25
portai
I'm PortAI, I can summarize articles.

Morgan Stanley (大摩) analysis team predicts that the Federal Reserve will cut interest rates by 0.25% in each of the next four meetings, bringing the federal funds rate range down to 3.625% by May next year. Morgan Stanley believes that a decrease in immigration and increased tariffs will lead to a slowdown in the U.S. economy and persistent inflationary pressures, coupled with a cooling job market, prompting the Federal Reserve to slow down the pace of rate cuts. Morgan Stanley estimates that U.S. inflation will gradually decline by 2025, but will still be above the 2% target by 2026, with the average core consumer price index expected to be 2.8% this year, 2.5% in 2025, and 2.4% in 2026. Morgan Stanley indicates that U.S. GDP is expected to grow by 2.4% year-on-year this year, with the growth rate dropping to 1.9% in 2025 and further declining to 1.3% in 2026. Morgan Stanley believes there are three possible scenarios for the U.S. economy in 2025, including the possibility of a hard landing, which includes: the Federal Reserve's rates being excessively tight until GDP contracts; rate cuts stimulating the economy to accelerate growth again. Morgan Stanley expects the Federal Reserve to pause rate cuts in the second half of 2026. Regarding the U.S. unemployment rate, Morgan Stanley estimates it will gradually rise from the current 4.1% to 4.5% by the end of 2026

According to the Zhitong Finance APP, Morgan Stanley's analysis team predicts that the Federal Reserve will cut interest rates by 0.25% at each of its next four meetings, bringing the federal funds rate range down to 3.625% by May next year. Morgan Stanley believes that a decrease in immigration and increased tariffs will lead to a slowdown in the U.S. economy and persistent inflationary pressures, coupled with a cooling job market, prompting the Federal Reserve to slow down its rate cuts.

Morgan Stanley estimates that U.S. inflation will gradually decline by 2025, but will still be above the 2% target by 2026, with the average core consumer price index expected to be 2.8% this year, 2.5% in 2025, and 2.4% in 2026. Morgan Stanley indicates that it expects U.S. GDP to grow by 2.4% year-on-year this year, with the growth rate dropping to 1.9% in 2025 and further declining to 1.3% in 2026.

Morgan Stanley believes there are three possible scenarios for the U.S. economy in 2025, including the possibility of a hard landing, which involves the Federal Reserve's rates being excessively tight until GDP contracts; or rate cuts stimulating the economy to accelerate growth. Morgan Stanley expects the Federal Reserve to pause rate cuts in the second half of 2026.

Regarding the U.S. unemployment rate, Morgan Stanley estimates it will gradually rise from the current 4.1%, reaching 4.5% by the end of 2026

Source: Zhitong The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.