Overview

• Morgan Stanley now projects a 25 basis‑point reduction in September, followed by another cut in December and quarterly trims through 2026 toward a 2.75%–3.0% target range.
• The shift abandons its earlier view that the Federal Reserve would not cut until March 2026.
• Market pricing has swung in the same direction, with LSEG and CME FedWatch showing roughly 82% odds of a September move.
• The call remains conditional, with Morgan Stanley cautioning that payrolls and CPI data could still forestall action and that any larger initial cut would likely require sizeable job losses.
• Goldman Sachs, JPMorgan, Barclays, Deutsche Bank, and BNP Paribas have issued similar September-cut forecasts, as analysts also note heavy federal interest costs and political pressure as part of the backdrop.