Morgan Stanley has changed its forecast for the Federal Reserve’s upcoming policy decision. The bank now expects an interest rate hike instead of holding rates steady.
The shift came late Monday, just hours before the Federal Open Market Committee was set to announce its decision. Morgan Stanley joins Goldman Sachs, which made the same call earlier.
Both banks initially predicted the Fed would leave rates unchanged. Their revised forecasts point to a quarter-point increase.
The eleventh-hour change reflects growing uncertainty over the central bank’s next move. Markets had been divided on whether policymakers would pause or tighten further.
Wall Street analysts often adjust calls close to Fed announcements as new data emerges. The dual revisions from two major banks signal shifting expectations across the financial industry.
The Federal Reserve has been raising rates to combat inflation. Officials have stressed that future decisions will depend on incoming economic data.
Investors will watch the Fed’s statement closely for signals about future policy. The central bank’s decision could affect borrowing costs, stock prices, and the dollar.
