Morgan Stanley and Bank of America anticipate that the Federal Reserve will not lower interest rates until 2026 amid ongoing inflation concerns.
Morgan Stanley's Forecast
Morgan Stanley recently stated that it expects the Fed to refrain from cutting interest rates until 2026. Compared to earlier forecasts, the current outlook is linked to persistent inflation and sluggish job growth.
Expert Opinions
Key figures from Morgan Stanley, including Michael Gapen and Andrew Sheets, have shared their insights on the current situation. Michael Gapen noted, "We think the Fed will stay on hold for the rest of this year, with a lot of cuts to follow in 2026. We think the Fed will be seeing more inflation first before it sees the weaker labor market later."
Market Impact
Higher interest rates could maintain conservative allocations in fixed income and cryptocurrencies. Historically, this may lead to reduced liquidity and interest in risk assets like BTC and ETH. Without significant labor market changes, the delay in rate cuts may continue to affect financial markets.
As interest rates remain high, significant regulatory responses or public statements from crypto leaders are not expected. Financial and technological impacts are anticipated to ripple across different sectors.
