No need for intermeeting or 50bps cuts, US economy 'not slumping': Morgan Stanley
Morgan Stanley analysts maintain that the U.S. economy is not experiencing a slump, despite the market's aggressive pricing of Federal Reserve rate cuts following recent jobs data.
Consumer growth is slowing from approximately 3% in the second half of 2023 to below 2% in the latter half of 2024. Morgan Stanley analysts believe this deceleration is essential for demand to soften and allow inflation to cool. "Our call was built on the changing structural foundations taking place in Japan as well as a final step to exit NIRP," they wrote.
In the Euro area, the firm anticipates two further cuts this year but acknowledges the potential for fewer hikes following consecutive sticky core inflation prints.
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