Morgan Stanley’s Gorman Warns Against Cutting Rates ‘Too Easily’

(Bloomberg) -- James Gorman has a note of caution for the Federal Reserve in the midst of its interest-rate reductions.

“The problem with cutting is it’s one of the few tools you’ve got,” Morgan Stanley’s chief executive officer said in a Bloomberg Television interview Tuesday, adding that he supports the reductions made so far. “So if you give it away too easily, what do you have if we have a real problem?”

Lenders have been hurt by the decline in interest rates driven by the Fed’s cuts. Investors expect policy makers to continue the reductions that began in July when they meet next week. President Donald Trump, who has criticized Fed Chairman Jerome Powell for not reducing rates fast enough, last month called for at least 100 basis points of cuts.

Gorman said he expects at least one or two more Fed rate cuts, but then there needs to be a pause to absorb the moves. Powell has waved off concerns of the U.S. economy falling into recession, and left open the option of further interest-rate cuts to keep the U.S. economic expansion on track.

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