The US Federal Reserve (Fed) is set to announce its critical October interest rate decision tomorrow. As global markets eagerly await the announcement, pricing currently reflects a 25 basis point rate cut at 97.8%.
Ahead of the Fed meeting, which has drawn keen attention from markets worldwide—including the cryptocurrency sector—Morgan Stanley shared its expectations. The investment bank forecasts that the Fed will lower its policy rate by 25 basis points, bringing it to the 3.75–4.00 percent range this week. This outlook aligns with general market consensus.
In a report prepared by Morgan Stanley economists, it was noted that the ongoing US government shutdown, which has delayed the release of key economic data, is unlikely to prevent the Fed from proceeding with the rate cut. While the Fed is expected to maintain its “easing trend” by signaling the possibility of additional interest rate reductions, the shutdown introduces uncertainty regarding the Fed’s decisions for December and beyond.
Morgan Stanley further emphasized that Fed Chair Jerome Powell is expected to uphold a “data-dependent” approach, continuing to send easing signals despite the current economic data challenges.
While Morgan Stanley expresses caution on the outlook for upcoming meetings and interest rate decisions, other financial institutions such as Bank of America (BofA), CIBC, and RBC anticipate that the Fed will pause its rate cuts at the next meeting following this week’s anticipated reduction.
