Morgan Stanley expects the Federal Reserve to hold interest rates steady despite a hawkish Jackson Hole speech from Chair Kevin Warsh. The bank's own inflation forecasts, plus a possible downward revision to core PCE, underpin that call. Prediction markets have already moved to reflect a lower chance of a near-term rate cut.
Morgan Stanley expects the Federal Reserve to hold interest rates steady at its coming meetings, even after Chair Kevin Warsh delivered a hawkish speech at the Jackson Hole symposium. The bank's own inflation forecasts explain why.
The bank projects August's core Consumer Price Index will rise 0.23% month-on-month. Core Personal Consumption Expenditures are seen increasing 0.20%. Revisions to PCE data could also pull the annual core inflation rate down to roughly 3.1% from 3.3%, giving the Fed room to wait rather than resume a rate hiking cycle.
Prediction markets have moved to match that view. Odds for a rate cut in October 2026 have dropped substantially, with traders reading Morgan Stanley's forecast as consistent with a Fed that holds steady while it watches incoming data.
Warsh's hawkish tone at Jackson Hole, on that reading, preserves policy flexibility rather than commits the Fed to fresh hikes. Morgan Stanley treats the rhetoric as positioning, not a signal of an imminent shift in rates.
Sources: Coinpedia Fintech News, Crypto Briefing
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