Morgan Stanley expects a series of 25-basis-point rate cuts through mid-2025, following the Fed’s recent 50-basis-point rate cut. Fed Chair Jerome Powell emphasized recalibrating policy as economic risks shift, with inflation pressures easing but labor market risks increasing. The FOMC projects two more cuts this year, with further reductions expected in early 2025. Unemployment is projected to rise to 4.4% by 2025, while the core personal consumption expenditures index is expected to decline to 2.2%. Despite the cuts, Powell views the economy and labor markets as healthy, boosting market optimism.
