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A U.S. rate cut this summer is all but ruled out. However, analysts and investors were convinced early this year that the Fed would change the gun's shoulder as early as June. But in recent months, inflation in the U.S. has regained momentum, making an interest rate cut currently out of the question. US major bank Morgan Stanley expects a first cut in September.

In the news: According to Morgan Stanley, a first interest rate cut will not be until September.

  • Although the financial institution remains confident that the Fed will cut interest rates by 25 basis points three times this year.
  • "A reversal in key components points to coming disinflation, but given the lack of progress in recent months, it will take a bit longer for the Fed to gain confidence to cut rates," it sounds in an analysis.
  • In doing so, the bank is not deterred by a sudden surge in inflation in recent months. For example, U.S. consumer prices were up 3. 5 percent in March compared with a year earlier, compared with an average price increase of 3.2 percent in February. In January, inflation was 3.1 percent. Morgan Stanley speaks of a temporary uptick in inflation. "We expect inflation to move in line with the Fed's target by the end of the year," it echoes. "In doing so, it is important that the central bank has sufficient confidence that inflation will fall toward the 2 percent mark in a sustainable manner."

Zoom out: What does the market expect?

  • According to the CME Fed Watch Tool, the market rates the probability of a first cut in September at 65 percent. Most assume that interest rates will fall by 25 basis points then.

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