Morgan Stanley joins Goldman Sachs in 11th-hour switch to forecasting a Fed hike
Morgan Stanley late on Monday revised its forecast for the Federal Open Market Committee, joining Goldman Sachs in predicting the U.S. central bank will raise interest rates rather than leave them unchanged. The shift represents a last-minute change by two major Wall Street firms ahead of the Fed decision.
Why It Matters
The move is notable because two prominent investment banks altered their expectations from the FOMC holding rates steady to forecasting a hike, signaling a synchronized change in major Wall Street forecasts at the eleventh hour.
Key Facts
- Firm that changed its call: Morgan Stanley
- Other firm that made a similar switch: Goldman Sachs
- Timing of Morgan Stanley change: Late on Monday
- Original forecast: FOMC would leave rates unchanged
- Revised forecast: Federal Reserve will hike interest rates (raise rates)
Morgan Stanley late on Monday adjusted its outlook for the Federal Open Market Committee, moving from a prediction that the central bank would keep interest rates unchanged to forecasting a rate increase. The bank’s revision came shortly before the Fed decision, matching a similar late change made by Goldman Sachs.
Both firms had previously expected the FOMC to maintain the current policy rate, but each updated its call to anticipate a tightening instead. The synchronous shift by two major Wall Street institutions occurred in the final hours ahead of the central bank’s decision window.
The revisions relate directly to expectations about the U.S. central banks handling of interest rates, with both Morgan Stanley and Goldman Sachs now predicting a hike rather than a hold. Observers will note the unusual timing, as the changes were made on the eve of the FOMC action.
The developments underscore a last-minute reassessment among at least two large financial firms about the likely near-term direction of U.S. monetary policy.
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