Morgan Stanley Says Fed Rate Hikes Could Return if Unemployment Falls Below 4%
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Morgan Stanley expects the Federal Reserve to keep interest rates unchanged through year-end but warns rate hikes could return in 2026 if unemployment falls below 4% or monthly core inflation reaches 0.3% or higher, while cooling oil and easing tariff effects currently support the no-hike view. That outlook raises downside risk for crypto prices and risk assets, likely dampening DeFi activity, CEX volumes, fundraising and token launches and increasing sensitivity around security and adoption decisions.
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- Morgan Stanley expects the Federal Reserve to keep interest rates unchanged through the year-end.
- Unemployment falling below 4% could revive concerns about an overheating labor market.
- Monthly core inflation of 0.3% or more could also shift the outlook toward tighter policy.
Federal Reserve rate increases remain a possible outcome for 2026 if the U.S. labor market strengthens unexpectedly or inflation proves more persistent than Morgan Stanley currently forecasts.
The bank retained its baseline expectation that policymakers will leave borrow…
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