Morgan Stanley has revised its forecasts for Federal Reserve interest rate cuts, predicting smaller reductions in the coming year and a delay in future cuts due to concerns over persistent inflation. Analysts now expect a 25 basis point cut in March and June 2025, instead of the previously anticipated 25 basis point cut in January 2025. The firm also raised its terminal rate projection to 2.6% from 2.4%.
) expects the Federal Reserve to cut interest rates by a smaller margin in the coming year, with the central bank also expected to delay future cuts amid concerns over sticky inflation.
They still expect the Fed to cut rates at least thrice in 2026, but now see a higher terminal rate of 2.6%, compared to prior forecasts of 2.4%. The central bank slashed its rate cut outlook for 2025, and is expected to cut rates only twice in the coming year.
Federal Reserve Interest Rates Inflation Morgan Stanley Economic Outlook
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