Democratic sweep in US elections would bring forward Fed rate hikes – Morgan Stanley

Omkar Godbole FXStreet Contributor

A blue wave or Democratic sweep in US Presidential Elections due on Nov. 3 could boost US economic growth prospects beyond 2021. However, it could also cause the Federal Reserve (Fed) to raise interest rates earlier than expected, according to Jim Caron, a fixed income portfolio manager at Morgan Stanley Investment Management.

Key quotes (Source: CNBC)

The Fed's first rate hike could be brought forward from around 2024-2025 to 2023-2024 — depending on how other policies, such as taxation, turn out in the event of a blue wave.

The US economy is already expected to rebound in 2021. An additional stimulus that's likely to come with a "blue wave" would further boost growth potential.

The Fed cut interest rates to near zero in March and launched bond-buying programs to counter coronavirus-induced recession fears. It has indicated that rates could stay at current levels through 2023.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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