2 July 2024
Morgan Stanley analysts suggest that a potential Trump victory in the upcoming presidential election could significantly impact interest rates. While rates remained low during Trump’s previous term and the early Biden administration, they surged in 2022 due to inflation caused by various factors. Now, with moderating inflation and economic growth, the focus is on when the Federal Reserve might start cutting rates. However, a Trump win could alter this trajectory, potentially leading to higher government borrowing and inflation expectations, which could influence the Fed’s rate decisions and overall economic policy.