Why Some Wall Street Giants Are Skeptical About a 2025 Rate Cut
While investors are increasingly convinced that the Federal Reserve will cut interest rates in September especially after July’s weaker-than-expected jobs data not everyone on Wall Street is buying the hype.
Economists at Morgan Stanley and Bank of America are urging caution. Their stance? Inflation remains sticky, and the labor market, despite soft patches, is still relatively stable. That doesn’t exactly scream “emergency rate cut.”
Despite markets now pricing in nearly an 88% chance of a 25-basis-point cut up sharply from just 37.6% at the end of July these analysts believe the Fed won’t be quick to pivot. They argue that rate cuts require more than just one weak jobs report; they demand clear, sustained signs of economic slowdown or disinflation.
So while traders may be front-running a dovish shift, some of the sharpest minds in finance are warning: don’t count your rate cuts before they’re hatched.