Morgan Stanley still expects the Fed to cut rates by 50 bps this month

10 Jul 2019, 20:00 · Views 8,991

The firm is still expecting such a move even after last Friday's jobs report

Morgan Stanley still expects the Fed to cut rates by 50 bps this month

Morgan Stanley argues that "a strong policy response is necessary to guard against risks of a further, sharper loss of economic momentum", while adding that the risks remain skewed to the downside and a significant hit to growth could emerge if financial conditions tighten - which would push corporate credit risks to the fore.

"We continue to expect a quick and front-loaded adjustment by policymakers to protect against downside risks. And that means a 50 bps cut this month...

We expect the policy-easing cycle to move into full swing and expect a stronger policy response from central banks than what markets and consensus currently expect."

That's certainly a bold call given how markets have positioned themselves in recent days and after Powell's statement two weeks ago on 'prevention being better than cure' (something along those lines). Let's see if they stick to it after hearing Powell's testimony today.

Reprinted from Forexlive，the copyright all reserved by the original author.

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