Morgan Stanley delays forecast for two Fed rate cuts until next year
Updated
Updated · MarketWatch · Apr 30
Morgan Stanley delays forecast for two Fed rate cuts until next year
9 articles · Updated · MarketWatch · Apr 30
After Wednesday’s FOMC meeting, chief economist Michael Gapen cited Strait of Hormuz tensions and stickier core inflation as reasons the cuts were moved from 2026.
The bank said the Fed is shifting from an easing bias toward neutrality, while CME FedWatch showed an 83.6% chance rates stay unchanged through year-end, up from 75.9% last week.
Morgan Stanley still expects later cuts if inflation cools as tariffs fade and shelter slows, but warned prolonged high oil prices could spill into core inflation; Brent hit a four-year high.
With oil shocks driving inflation, is the Federal Reserve's rate policy now powerless against geopolitical events?
As the ECB and Fed diverge on rates, is the era of global central banks acting in sync officially over?
As stagflation fears grow, where can investors find safety when both stocks and bonds are at risk?