Morgan Stanley maintains its forecast for Fed rate cuts in June and September, with market expectations now pushed back to December

Gate News: On March 17, Morgan Stanley maintained its forecast that the Federal Reserve will resume rate cuts in June and cut again in September, despite soaring oil prices prompting traders to reduce their bets on rate cuts this year. Morgan Stanley Chief U.S. Economist Michael Gapen said during a Bloomberg roundtable in New York on Monday (March 17), “We still expect action in June and September, though there is a risk of delay.” This forecast contrasts with market expectations that are quickly ruling out the possibility of rate cuts, as rising oil prices following the Iran conflict could reignite inflation and hinder the Fed’s ability to ease monetary policy. Futures tied to the Fed’s policy rate currently price in a 25 basis point cut in December, whereas last month, markets expected at least a 50 basis point cut this year. The market assigns a 60% probability of a 25 basis point cut in September. Economists at TD Securities and Barclays Bank last week both pushed back their predictions for the Fed’s next rate cut from June to September.