Economists at Morgan Stanley predict that due to the recent drop in inflation, the Federal Reserve will begin to loosen monetary policy in December, rather than in the first quarter of 2025. "Breadth indicators show a clear improvement, which is conducive to a decline in inflation," economist David Doyle wrote on Tuesday when discussing the May CPI report. "This improvement, combined with more mixed signals in the labor market, prompted us to bring forward our basic scenario forecast for FOMC easing policy." Morgan Stanley currently expects a 25 basis point rate cut in the fourth quarter, specifically in December, instead of the first quarter of 2025 as previously predicted.