The market is still underestimating the number of cuts this year: Morgan Stanley

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The market is still underestimating the number of cuts this year: Morgan Stanley

Morgan Stanley economists offered insights into recent economic data and its implications for potential Federal Reserve interest rate cuts.

Accordingly, "the market is still underestimating the number of moves this year." However, the brokerage firm added that more evidence would be required for the Fed to begin cutting rates. Notably, the Consumer Price Index data for April did not significantly underperform expectations, but rather aligned with them, providing relief to financial markets.

Inflation figures appear to be on a downward trajectory based on April's inflation figures. Core Personal Consumption Expenditures inflation, which had spiked to an annualized rate of 4.4% in March from 1.6% in December 2023, is projected to decelerate, with April's core PCE tracking at 0.26% month-over-month compared to 0.32% in March.

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