Morgan Stanley Predicts Fed Will Pause Rates Despite Hawkish Talk

Morgan Stanley is betting that the Federal Reserve will hold interest rates steady in the coming weeks. This outlook persists even after Kevin Warsh delivered a hawkish speech at the Jackson Hole economic symposium. The bank believes the current economic data justifies a patient approach rather than immediate policy changes.

The firm projects that the core CPI for August will rise by 0.23 percent. Meanwhile, core PCE is expected to climb by 0.20 percent. These figures suggest that inflation is moving in a direction that allows the central bank to avoid aggressive rate hikes for now.

Revised PCE data might even push annual core inflation down from 3.3 percent to 3.1 percent. For crypto traders, a pause in rate hikes is often viewed as a positive sign. Stability in interest rates typically helps risky assets gain momentum as the pressure of rising borrowing costs fades.

Keep an eye on upcoming inflation reports to see if the market remains aligned with these predictions. If the Fed chooses to hold, it could provide the breathing room that digital assets need to find support.