September 12, 2025 — Morgan Stanley analysts predict that the U.S. Federal Reserve will cut interest rates at all three of its remaining meetings this year. The forecast comes after the latest economic report showed consumer prices rising in August, keeping inflation above the Fed’s long-term target.
Markets had already been expecting a more accommodative stance, but the combination of persistent inflation and signs of slowing growth is shaping expectations for an aggressive easing cycle. According to Morgan Stanley, the Fed could deliver sequential cuts aimed at both curbing borrowing costs for households and businesses and preventing a deeper economic slowdown.
The stakes are high. Investors are debating whether the central bank will focus primarily on stabilizing inflation or shift toward measures to stimulate demand and protect employment. U.S. stock markets responded positively, with Wall Street indexes hitting record levels this week as hopes for cheaper credit buoyed sentiment.
While bond yields fell sharply, reflecting the market’s pricing of rate cuts, some economists remain cautious. They warn that premature or excessive easing could reignite inflationary pressures and undermine the Fed’s credibility.
Still, with consumer spending cooling and business investment weakening, many analysts believe the Fed has little choice but to act. “The balance of risks has tilted toward growth concerns,” said a Morgan Stanley strategist. “Multiple cuts before year-end now seem not just likely, but necessary.