Morgan Stanley has changed its forecast regarding a potential Federal Reserve interest rate cut next month. In a note dated Aug. 26, Morgan Stanley Chief Economist Michael Gapen joined a growing trend of global brokerages changing forecasts. This is due to Fed Chair Jerome Powell's recent shift in tone toward rising labor market risks.

The Fed’s focus on jobs over inflation has nudged Morgan Stanley to surrender its hawkish view and call for a September rate cut alongside its peers

Morgan Stanley has joined a growing bloc of global brokerages forecasting a September interest rate cut by the U.S. Federal Reserve, citing Chair Jerome Powell's shift in tone toward labor market risks at the Jackson Hole symposium.