Wall Street Adjusts Fed Rate Cut Forecast Amid Inflation Concerns

Morgan Stanley, along with Goldman Sachs and Barclays, has adjusted its forecast for the U.S. Federal Reserve's interest rate cuts to September from June due to inflationary risks stemming from the Middle East conflict. Higher energy prices and economic uncertainties play a pivotal role in these revised expectations.

Morgan Stanley has revised its forecast for the U.S. Federal Reserve's interest rate cuts, aligning with Goldman Sachs and Barclays in predicting a shift from June to September. The decision follows rising inflation concerns linked to the ongoing Middle East conflict.

The brokerage now anticipates a quarter-point rate reduction in both September and December, a change from its earlier expectation for cuts in June and September. Marked by heightened energy prices, the inflationary pressure makes the economic impact uncertain, as highlighted by Fed Chair Jerome Powell.

Projections suggest that the Federal Open Market Committee plans a rate cut by the year's end. However, major Wall Street firms continue to bank on two reductions. Oil prices, surging above $100 a barrel, and volatile market conditions are pivotal to this financial forecast.

(With inputs from agencies.)