As of August 21, 2025, a growing chorus on Wall Street argues that the United States Federal Reserve may not cut interest rates this year. Morgan Stanley’s research team has publicly pushed back on the popular view that a September cut is likely, setting up a clear split between market pricing and the bank’s house view.
Recent coverage shows this divide in sharp relief. Business Insider reported on August 5 that top economists at Morgan Stanley and Bank of America see no rate cuts in 2025 even as futures markets lean toward easing. That reporting referenced the CME FedWatch probabilities that surged after soft labor data.
At the same time, other Morgan Stanley materials through the summer show a debate inside the firm over timing. In late June their team discussed two cuts by the end of 2025 based on the Fed’s own projections. In early August their analysts again argued that a cut in September was not their base case. These pieces capture how quickly the narrative has shifted as new data arrived.
What the latest Fed signals say
The minutes from the July meeting revealed rare public dissent inside the Federal Reserve system and highlighted uncertainty about inflation, tariffs, and the labor market. Reporting this week noted that two governors favored a quarter point cut while the committee kept the policy rate unchanged. Markets still lean toward a cut in September, but the tone from officials remains cautious ahead of the Jackson Hole conference.
Powell’s Jackson Hole speech is expected to walk a narrow line. Investors are watching to see whether he validates market pricing for a near term cut or keeps the focus on incoming data. Odds from the CME FedWatch tool have oscillated near the eighty to ninety percent range for a September move in recent days according to multiple outlets that track those probabilities.
Real time crypto context
XRP has cooled after recent strength. Data services show prints near the high two dollar range this week. YCharts lists a level of about two point eight six dollars for August 20 while a same day news update placed spot near two point nine zero dollars with signs of profit taking. Bitcoin has traded around one hundred twelve thousand to one hundred sixteen thousand dollars over the past few sessions. These references help frame how sensitive crypto remains to rate expectations.
Why a no cut stance would lean bearish for crypto and XRP
Higher policy rates translate into tighter financial conditions. That usually reduces the appetite for risk and can pressure valuations of assets without cash flows. If Morgan Stanley’s view plays out and the Fed holds steady through year end, crypto could face a longer stretch without the liquidity tailwind that fueled prior rallies. History does not guarantee outcomes, yet the directional link between easier money and stronger crypto flows is a useful guide for positioning.
There is also a second order effect. Elevated rates keep yields on cash and short duration bonds attractive relative to volatile assets. That relative return can pull marginal capital away from tokens, especially after strong year to date gains in majors such as Bitcoin and large cap alts. XRP often trades with beta to the broader crypto complex, so prolonged tight policy can amplify swings during periods of thin liquidity.
What could flip the story
The path is not one way. Three categories of surprises could push the Fed toward easing sooner.
Labor data that weaken faster than expected and broaden beyond a few sectors
nflation that cools decisively toward the Fed target across both core and services measures
Policy or tariff shifts that reduce inflation risk premia and improve confidence in the outlook
Several recent reports underscore these cross currents. Reuters and Barron’s have highlighted the mix of softening jobs indicators and sticky inflation as policy makers weigh September. The debate remains live and the data over the next few weeks will be pivotal.
How traders and investors can think about positioning
This is not investment advice. It is a framework for navigating uncertainty.
Respect the policy risk. If the Fed does not cut in 2025, extend your time horizon for any thesis that depends on easier money
Focus on quality within crypto. Larger liquid tokens tend to hold up better when funding tightens
Manage exposure around event risk. The Jackson Hole speech and the September policy meeting are the next key catalysts
Use data driven levels. Monitor implied probabilities from CME FedWatch and confirm with price action in rates and the dollar
For quick reference, the CME FedWatch dashboard aggregates probabilities for each meeting date and updates continuously during trading hours. It is a useful cross check against headlines and social sentiment.
Final Thoughts
Morgan Stanley’s published view this month is that a September rate cut is unlikely, and some coverage extends that skepticism to the entire year. Markets still price a high chance that the Fed will ease soon. That tension is the story. While this split persists, crypto and XRP are likely to trade in a sensitive regime where each macro headline moves prices. Staying anchored to original sources and real time data will help you avoid whipsaw.
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