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Bar Is High for Fed to Help Investors, Morgan Stanley Says

  • Key break seen from past years when slumps turned Fed dovish
  • With slowing growth, higher inflation, 2019 is ‘challenging’
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Tony Morriss of BofAML discusses Fed policy and his outlook for the U.S. economy.(Source: Bloomberg)
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The Federal Reserve isn’t likely to come to the rescue of stock investors this time around, given the likelihood of persistent inflationary pressures, Morgan Stanley’s cross-asset strategy team warned.

“The Fed and other developed market central banks are in a fundamentally different place than 2010-17,” Morgan Stanley strategists led by Andrew Sheets in London wrote in a note on Sunday. With core inflation picking up, “this makes it materially more difficult to sound dovish while remaining consistent with a mandate” to contain price gains, they wrote.