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Fed to cut US rates in September – Morgan Stanley

Fed to cut US rates in September – Morgan Stanley

Mubasher: The US Federal Reserve is set to slash its interest rates in its upcoming policy-making meeting next September, as per predicted by Morgan Stanley.

“Trade’s ‘simmer’ has begun to boil, business sentiment and capex (capital expenditures) have softened further, global growth remains weak and inflation expectations have fallen,” a Morgan Stanley note was quoted by Reuters.

The Fed reduced its interest rate benchmark by 0.25%, marking the first rate cut in a decade, and hinted its readiness to provide more support as growth slows in the world’s largest economy.

The US investment bank previously expected a rate cut in October alone, and expected the Fed would adopt a wait-and-see approach awaiting “further evidence that downside risks are weighing on the economy.”

Morgan Stanley joined a number of investors wagering that the US central bank’s late July rate cut would be the first of several moves to come.

Goldman Sachs saw potential moves to cut borrowing costs in both September and October.