Economists for Morgan Stanley
Berner, the company's chief US economist, and Greenlaw, its chief US fixed income economist, wrote in a commentary that the Fed may be ready to "move to the sidelines," adding that the distribution of $115 billion in tax rebates presents an opportunity to take a break.
"Looking ahead, we think the Fed will keep policy on hold for the balance of this year. That forecast reflects our view that downside risks to the economy will persist into early 2009," they wrote. "It gives the Fed options: If the economy weakens significantly again after the temporary impact of the fiscal stimulus fades away, the FOMC could certainly cut rates further."