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While the puzzle of when the FED will start reducing interest rates continues, predictions now point to September.
At this point, while analysts and top banks were focusing on September for the first interest rate cut, a statement also came from the giant US bank Morgan Stanley.
Accordingly, the financial giant predicts that both the US Federal Reserve (FED) and the European Central Bank (ECB) may reduce interest rates in September.
Speaking to CNBC, Andrew Sheets, a senior strategist at Morgan Stanley, said that these forecasts are based on the latest economic data showing that inflation is decreasing.
Commenting on the ECB's first interest rate cut after nearly five years, Andrew Sheets commented on the FED's view that US inflation is still too high for interest rate cuts, and said that both institutions took a cautious stance.
However, the analyst argues that high inflation will decrease sufficiently by September and thinks that the decreasing inflation will necessitate interest rate cuts in September.
“We are more optimistic that both the FED and the ECB will cut interest rates in September.
It is understandable that these central banks do not want to make a definitive statement about interest rate cuts in advance.
They do not want to appear overly complacent about inflation risks.
However, we think that the data the ECB will see until September will show that inflation continues to remain moderate. “I think inflation continues to fall for the FED.”
Morgan Stanley's interest rate forecast has sparked discussions about potential positive outcomes for various markets, including Bitcoin and the cryptocurrency market. At this point, experts think that the bilateral interest rate cuts by the FED and ECB will support the ongoing bull run in BTC and altcoins.
*This is not investment advice.