Morgan Stanley gives up June rate cut bet as stronger inflation muddies outlook
Investing.com -- Morgan Stanley ditched its call for a June interest rate cut and now sees the Federal Reserve hiking three times year following recent stronger inflation and growth data that muddied the outlook for rates.
The analysts, however, call for a rate cut at every meeting starting in July that will see rates falling to 3.625% by mid-2025 on expectations that the disinflationary trend will persist because the strength in the economy has been driven by surge immigration that has boosted productivity without adding inflation pressures.The US economy is experiencing a positive supply side shock, which allows for a larger economy without adding inflationary pressures," Morgan Stanley said.
"Despite the significant upgrade to GDP growth, we now see more slack in the labor market and have little revised our inflation forecasts, the analysts said. "A third straight quarter of GDP growth over 3% should be the nail in the coffin for anyone expecting rate cuts any time soon," Jefferies said in a note.Yeah no kidding…politicians are talking about more rate hikes. Not that i expect it but yes the inflation is still a problem.
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