The Federal Reserve (FED) has paused interest rate cuts since January and decided to keep rates at 4.25%-4.5%. This decision has significant implications and raises discussions among economists.
FED's Interest Rate Decision
The FED last kept interest rates steady in June, with hopes of cuts pushed to July and September. FED Chairman Jerome Powell emphasized the need for data analysis and continued dependence on tariffs.
Morgan Stanley's Forecasts
Morgan Stanley released a forecast stating that the FED does not expect rate cuts in 2025 but anticipates seven cuts in 2026. The final interest rate may fall to 2.5%-2.75% by the end of 2026.
Differences in Predictions
According to the latest dot plot released by the FED in June, two rate cuts are expected in 2025 and one in 2026. However, Morgan Stanley disagrees and believes there will be no cuts next year.
Despite public expectations for changes in interest rates, experts like Morgan Stanley present an alternative perspective, suggesting that the future might hold surprises.
