Morgan Stanley Wealth Management's Chief Investment Officer has stated that the Federal Reserve will continue to lower interest rates in November, but policymakers are proceeding with caution as inflation is no longer accelerating and is cooling down.

Lisa Shalett indicated that the Federal Reserve is focused on the labor market, with evidence suggesting that the labor market is "mixed."

"They are not pursuing the 2% (inflation) target; they have given up on it," she said.

Last week, the majority of Federal Reserve policymakers gave the green light for further rate cuts in the coming months, while Atlanta Fed President Bostic suggested that it might be reasonable not to cut rates in November.

Shalett said, "The stock market has not yet realized this, but as higher inflation expectations are digested, the bond market seems to be starting a rebound from a long-term perspective."

Data released last week showed that the U.S. Consumer Price Index (CPI) for September rose slightly more than expected, while the Producer Price Index (PPI) remained flat.

Traders currently believe that there is an 89% chance of a 25 basis point rate cut at the Federal Reserve's policy meeting on November 6th and 7th, abandoning the expectation of a 50 basis point cut following the release of the September employment report and other optimistic economic data.

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In the meantime, Shalett said that, given the closely contested nature of the two parties, she expects there will be no clear outcome on the day of the U.S. presidential election on November 5th.

Last week's polls showed Democratic Vice President Harris and former Republican President Trump neck and neck in seven battleground states.

Shalett said, "We encourage our clients to anchor their positions in what we refer to as real assets... including gold, commodities, real estate, and energy infrastructure assets," to "shelter" from increasing market volatility."We also favor market-neutral hedge fund strategies," she added.