Don’t Expect Interest Rate Cuts Anytime Soon, Says Morgan Stanley (MS)

FomoAnxiety · 2026-03-13T16:57:10+00:00

Morgan Stanley predicts the U.S. Federal Reserve will maintain current interest rates despite rising inflation and economic weakness, anticipating only one cut this year. They suggest the Fed will overlook energy price pressures amid challenging economic conditions.

FomoAnxiety

2026-03-13 16:57:10

Abstract generation in progress

The U.S. Federal Reserve is likely to remain on hold with interest rates amid signs of rising inflation and a weak economy, says Wall Street investment bank Morgan Stanley MS +0.34% ▲ .

Claim 70% Off TipRanks Premium

Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
Stay ahead of the market with the latest news and analysis and maximize your portfolio’s potential

Analysts at Morgan Stanley expects the U.S. central bank to “remain on hold and retain its easing bias” in the face of difficult economic data, as well as spiking crude oil prices that are hovering around $100 per barrel following military attacks on Iran.

Morgan Stanley’s Chief U.S. economist Michael Gapen is now projecting only one interest rate cut this year, likely in the autumn, and one cut in 2027. Those moves by the Fed are likely to keep the central bank’s terminal rate in a range of 3% to 3.25%.

What the Data Says About the U.S. Economy

“The oil price shock should mean higher headline inflation forecasts, but models and past Fedspeak suggest the Fed will look through energy price pressures,” writes Gapen in a note to clients. Morgan Stanley expects the Fed to hold interest rates for the time being.

“We have high conviction that the Fed will not respond with rate hikes,” adds Gapen in his note, adding that appropriate policy “calls for the Fed to ‘look through’ energy price pressures … and stay on hold or cut rates if activity weakens.”

The new outlook from Morgan Stanley comes on the same day that

Disclaimer & DisclosureReport an Issue

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.