Morgan Stanley expects the Federal Reserve to maintain its current policy rates through the end of 2026. This forecast suggests rates will remain in the 3.50% to 3.75% range. The bank’s cautious approach is based on the expectation that inflation will continue to cool, increasing the likelihood of a pause in rate changes at upcoming Fed meetings. Markets are now reducing expectations for rate hikes at the September and October 2026 meetings, indicating a growing consensus around unchanged rates.
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