Fed Chair Jerome Powell Is Not 'In A Rush To Raise Rates Again,' Says Morgan Stanley: FOMC Meeting Preview

Morgan Stanley MS released a research note on Monday outlining their predictions for the FOMC meeting statement scheduled for Oct. 31-Nov. 1 and the following press conference.

The investment bank expects the FOMC statement to acknowledge the continued expansion in economic activity. Analysts also anticipate the statement to reflect on the recent strength seen in the labor markets.

They also expect the statement to highlight the conflict between Israel and Hamas, as they continue to have implications for the U.S. economy, particularly energy prices. In terms of forward guidance, Morgan Stanley expects a softer guidance from September, with no change in the Fed’s balance sheet normalization plans.

At the press conference, analysts anticipate Fed Chair Jerome Powell to continue to describe balanced risks to the outlook and to reiterate the range of uncertainties that the Fed currently faces in deciding the course of its monetary policy actions.

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According to Morgan Stanley, past monetary policy tightening finally appears to be having its effect on the economy in recent weeks, resulting in a reduced appetite for near-term rate hikes, and Powell “will not sound in a rush to raise rates again.”

Per this latest research note, Morgan Stanley’s forecasts do not indicate the U.S. economy entering into a recession anytime before H1 2025. Even by H1 2025, there’s just a 50% chance that it might enter into one.

The forecast takes into account Morgan Stanley’s responses to the NY Fed’s Survey of Primary Dealers and economic data through the September retail sales report.

Now Read: Fed Likely To Resume Rate Hikes In December As Economy’s Strength Continues, Says Bank of America

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