Morgan Stanley expects the U.S. Federal Reserve to begin cutting interest rates in September, from its earlier view of the Fed staying on hold until March 2026, after Chair Jerome Powell signaled a shift in focus toward labor market risks in remarks at Jackson Hole.

Federal Reserve chairman Jerome Powell signaled a possible interest rate cut in the months to come, sending stocks sharply higher.

Now that Federal Reserve Chair Jerome Powell has signaled that the central bank could soon cut its key interest rate, he faces a new challenge: how to do it without seeming to cave to the White House’s demands.