Morgan Stanley sees Powell using Jackson Hole to temper bets on a 50bp September Fed cut. There are some thoughts he'll push back on a rate cut at all. Either choice could disappoint markets.
The third choice is not to push back at all. That'll be a 'sell the fact' disappointment even ahead of the September meeting.
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Morgan Stanley Wealth Management says the key focus in the coming weeks will be whether Federal Reserve officials push back on market expectations ahead of the September policy meeting.
- “If they think the market is wrong, they will go out there, because they’ve got a job to do to talk down the market,” the firm said, noting that policymakers opposed to a near-term cut are also expected to speak publicly.
Attention is now turning to Fed Chair Jerome Powell’s high-profile address at the central bank’s annual Jackson Hole symposium on August 22, an event that has taken on the feel of a “quasi” policy meeting. Morgan Stanley expects Powell to keep the door open to a September cut, but to signal that a larger 50-basis-point move is unlikely, effectively taking that option off the table.
The bank still anticipates the Fed will deliver a modest 25-basis-point reduction next month, with any pushback aimed at curbing expectations for a more aggressive half-point easing.
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This article was written by Eamonn Sheridan at investinglive.com.from Investinglive RSS Breaking News Feed https://ift.tt/8aNtuQZ
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