Central Banks
Morgan Stanley Analysts See Fed Ending QT in 2024 After Rate Cut
- Bank sees Fed cutting interest rates in December 2023
- Balance sheet shrinking began in June, accelerated September
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Morgan Stanley analysts predicted the Federal Reserve will stop reducing the size of its balance sheet in 2024 after cutting interest rates for the first time the previous December.
So-called quantitative tightening may still end early “if the economy goes into recession and the Fed is contemplating big cuts of 100 basis points or more,” analysts including chief economist Seth Carpenter wrote in a report to clients. “Similarly, if markets were dysfunctional along the lines of March 2020 or the recent episode in the gilt market, we would expect QT to end, at least temporarily.”