The Morgan Stanley analysts expect the US Federal Open Market Committee (FOMC) to make no changes to its interest rates, but expect another 5bps IOER cut.

“We expect the FOMC to leave its target range unchanged at 2.25%- 2.50%. With increased volatility in the effective federal funds rate and a press conference following this meeting, our rates strategists look for the Fed to deliver another 5bp IOER cut. The statement gets only small adjustments to the current conditions paragraph describing the rebound in consumer spending and lower core inflation. The press conference affords Chair Powell the opportunity to respond to concerns about softer readings on inflation and offer his take on the underlying strength of the economy, as well as the Fed's current view on financial stability. He could also provide further details on the Committee's discussion of the longer-run composition of its balance sheet.”