Economists at Morgan Stanley, citing a "lack of progress" in inflation, pushed back expectations for the timing of the Fed‘s first rate cut from July to September. They still expect three rate cuts of 25 basis points each this year. Economists such as Ellen Zentner, Sam Coffin and Diego Anzoategui said in the report that the lack of progress since the start of the year means that it will take longer for Fed policymakers to be convinced that inflation is coming down sustainably toward its 2% target. They expect the three- and six-month core PCE to be "close to or below" 2% by the end of the year, in which case it will be "too late" to wait until after September to cut rates.
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