Morgan Stanley has adjusted its forecast for Fed rate cuts based on recent comments from Fed Chair Jerome Powell.
Morgan Stanley Rate Forecast
Morgan Stanley predicts that the Federal Reserve will cut interest rates by 25 basis points in both September and December 2025. This forecast shift follows Fed Chair Jerome Powell's emphasis on labor market risks over inflation concerns.
Financial Markets Reaction
Financial markets have responded to Powell's statement, with options and futures markets pricing an 82–87% probability of a September rate cut. Historically, rate cuts correlate with bullish trends in cryptocurrencies such as BTC and ETH.
Impact on Digital Assets
The focus on labor markets suggests a careful approach from the Fed. Rate cuts could lead to additional capital inflows, positively impacting digital assets and financial markets sensitive to liquidity changes.
Morgan Stanley's updated outlook on rate cuts could significantly affect various sectors, including cryptocurrencies and financial markets, leading to a new phase of growth in the digital economy.
