Morgan Stanley Fixed-US Economics Global Macro Strategy FOMC Reaction Supply-...-107142530

MMarch21,202401:17AMGMTMorganStanley&Co.LLCIdeaUSEconomics&GlobalMacroStrategyNorthEllenZentner+1212296-4882America+1212761-1445ChiefUSEconomist+1212761-4630FOMCReaction:Supply-SideEllen.Zentner@morganstanley.com+1212761-8573Story+1212761-0857GuneetDhingra,CFA+1212761-1837Asweexpected,theFedcontinuestosee3cutsthisyear,and+1212761-5287adoptedthestrongsupply-sidenarrativewehavebeencallingStrategist+1212761-2647forinitsforecasts.Wemaintainourcallfor4cutsthisyear,butGuneet.Dhingra@morganstanley.com+1212761-6076highernear-termrplacesour2025ratespathunderreview.OurstrategistsstaylongSFRZ4,andneutralagencyMBS.SamDCoffin+8136836-5466KeyTakeawaysEconomist+1212761-6051Sam.Coffin@morganstanley.com+1212761-2779•Ratesdecision:TheFOMCheldthepolicyrateunchangedinarangeof5.25-5.50%,whereithasremainedsinceJuly2023.PowellbelievesDiegoAnzoateguiJanandFebinflationdataarenotanewtrend;heremainspatient.WecontinuetoexpectaJunestart,followedbycutsattheSep,Nov,andEconomistDecmeetings.Diego.Anzoategui@morganstanley.com•Outlook:Strongersupply-sidestoryistoldinasizableupwardSarahAWolferevisiontogrowththisyear,withonlymodestupwardrevisiontoinflation.Committeeremainsata3-cutmedianstarting"atsomeEconomistpoint"thisyear.Despiteahigherlong-runrate,long-rungrowthwasSarah.Wolfe@morganstanley.comunchangedat1.8%,indicatingtheFedseesrecentsupply...