Morgan Stanley(US:MS) Sou Hu Cai Jing·2025-08-26 10:18Core Viewpoint - Federal Reserve Chairman Jerome Powell's unexpected dovish stance at the Jackson Hole central bank conference has led Wall Street investment banks to adjust their expectations for the Fed's interest rate cuts [1] Group 1: Federal Reserve's Interest Rate Predictions - Morgan Stanley now predicts that the Federal Reserve will begin cutting rates in September, a shift from their previous forecast of no changes until March 2026 [1] - Morgan Stanley expects a 25 basis point cut in September, followed by another 25 basis point cut in December, and quarterly cuts of 25 basis points until the target rate reaches 2.75%-3.0% [1] - Barclays, BNP Paribas, and Deutsche Bank have also revised their forecasts, anticipating a 25 basis point cut in September and two cuts within the year, interpreting Powell's comments as signs of potential easing [1] Group 2: Labor Market and Inflation Insights - Powell's remarks indicated a change in tone regarding labor market risks, suggesting that the Fed may proactively respond to downside risks in the labor market [1] - Powell emphasized that tariffs would cause a one-time increase in prices, but the effects would take time to manifest [1] - The probability of a rate cut in September increased from 75% to 87% following Powell's speech, according to the Chicago Mercantile Exchange's FedWatch tool [1]