MS · News · 20260816N
Interest Rate Outlook
MORGAN STANLEY · 2026-08-16 · Importance 17 · Surprise 24 · In source text
Morgan Stanley believes disinflation is underway, supported by recent U.S. inflation data showing moderated price pressures. The Federal Reserve may therefore hold interest rates steady in the near term. However, new supply shocks or stronger-than-expected price pressures from artificial-intelligence demand could create upside risks to the 2027 rate outlook and prompt further rate hikes rather than cuts. Morgan Stanley projects that the Fed’s preferred inflation measure, core PCE, will decline, but views the durability and extent of disinflation as uncertain.
Key facts
- Morgan Stanley highlights significant upside risks to its 2027 rate outlook, including potential new supply shocks or stronger-than-expected price pressures from AI demand which could lead to further rate hikes rather than cuts. source
- Morgan Stanley projects the Fed's preferred inflation gauge, core PCE, is projected to fall. source
- Morgan Stanley says disinflation is currently underway, supported by recent U.S. inflation data showing moderated price pressures. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| net_income | unclear | contingent | — | Morgan Stanley highlights significant upside risks to its 2027 rate outlook, including potential new supply shocks or… |