Morgan Stanley anticipates the Fed will hold rates steady at the January meeting while upgrading its assessment of the labor market. Chair Powell is expected to emphasize data dependence and policy uncertainty, leaving the door open for a potential rate cut in March.
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Conclusion:
Morgan Stanley projects no rate change at the January FOMC meeting but expects upgraded labor market language and a focus on inflation progress. The Fed may hint at a March cut while signaling a shift in balance sheet policies, adding nuance to its monetary stance.
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