Wall Street giant Morgan Stanley expects the Fed to leave interest rates unchanged throughout this year, but warned of factors that might justify a rate hike by the Fed. Fed Chairman Neel Kashkari also expressed his stance on monetary policy, warning that they may raise interest rates if inflation persists.
Morgan Stanley expects a Fed rate hike unlikely
The bank still expects the Fed to leave interest rates unchanged this year, but warned of the risks that might justify raising interest rates. They noted that the rises could return if the unemployment rate falls below 4% or inflation remains high.
As CoinGape reported, The inflation rate in personal consumption expenditures in the United States rose to 4.1%This is its highest level since 2023, raising further concerns about… Economic inflation. However, oil prices have continued to decline since the US-Iran peace deal, which is expected to ease inflationary pressure on energy prices. This particularly supports the view that a rate hike by the Fed is unlikely this year.
However, some experts still expect the Fed to raise interest rates this year. As CoinGape reported, Bank of America forecast Three interest rate hikes by the Fed this year, starting at the September FOMC meeting and continuing through the December FOMC meeting.
Cryptocurrency traders are also still weighing in on the possibility of the Fed raising interest rates despite the US-Iran peace deal. Polymarket data shows a 53% chance of a rate hike this year, which they expect to happen in September.
Meanwhile, CME FedWatch data shows that traders expect a Federal Reserve rate hike at the Federal Open Market Committee meetings in September, October and December. There is a 47.3% chance of a rate hike at the September FOMC meeting.
Neel Kashkari comments on monetary policy
Minneapolis Fed President Neel Kashkari revealed in an interview with Bloomberg that he was among those who expected a Fed rate hike this year. He said signs of widespread inflation prompted the move.
As CoinGape reported, the Fed has taken a hawkish approach Federal Open Market Committee meeting in June Earlier this year. In their economic forecasts, nine of the 18 Fed officials expect to raise interest rates at least once this year, while six of those nine expect multiple increases this year.
Meanwhile, Kashkari noted that his concern about inflation is not only related to the US-Iran war and the disruption of global oil supplies. He said: “I am concerned about inflation, and it is not only related to what is happening in the Middle East, but rather it is just the impression that there are broader inflationary pressures in the economy.”
