- Banking giant Morgan Stanley ruled out further interest rate cuts in the upcoming December FOMC meeting.
- The financial institution cited resilient jobs data in its assessment, but raised the high probability of a series of cuts in January, April, and June 2026.
- CME Group’s Fedwatch mirrored the bleak sentiment, with over half of respondents to its poll expecting the Fed to keep the status quo.
The likelihood of another US Federal Reserve interest rate cut is weakening. The situation caused major indices to tumble, with its ripple effect driving Bitcoin (BTC) to around $86,000 for the first time since April 2025.
Morgan Stanley’s FOMC Prediction
Adding fuel to the already-burning long positions in crypto was Morgan Stanley’s bleak outlook for another interest rate cut. According to the multinational investment bank’s statements on Reuters, it no longer looks forward to a December interest rate cut, which it earlier expected to bring the figures down by a quarter point.
Despite the October jobs report blackout, Morgan Stanley predicted that the Fed will probably reference the resilient jobs data in September to rule out any downside adjustments to interest rates. Non-farm payroll jobs notably rose from a 4,000 drop in August to 119,000 in September. Yet, unemployment remained at a four-year high of 4.4% in the last Bureau of Labor Statistics (BLS) findings.
Morgan Stanley interpreted the trend as stabilization, which may not warrant the Federal Open Market Committee’s (FOMC) call for intervention at the December 9-10 meeting. Moreover, there’s the fact that the inflation rates are still a long way from the Fed’s ideal 2% pace.
Nonetheless, the financial institution forecasted a series of rate cuts next year starting in January, followed by slashes in April and June. These could pull the numbers down to 3%-3.5% from the prevailing 3.75%-4%.
Amid market uncertainty, Morgan Stanley suggested that investors go heavy on their AI (artificial intelligence) stock bets in the US due to their “potential for further upside” in the long run.
CME Supporting the Bleak Interest Rate Cut Forecast
The CME Group’s FedWatch echoed Morgan Stanley’s dim evaluation. As of Thursday evening (UTC), over half (58.4%) of respondents in its poll believe the Fed will likely keep the status quo after the next FOMC meeting.
On the other hand, 41.6% were optimistic about the interest rate cut. The trend was a significant wind-down from the previous 98% anticipation rate a month ago.
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