Morgan Stanley expects Fed to hike rates in July
Morgan Stanley said on Tuesday it was now expecting the U.S. Federal Reserve to hike its key interest rate by 25 basis points in July, from an earlier estimate of a pause, raising its terminal rate forecast to 5.375%.
Morgan Stanley previously expected a peak rate of 5.1%. The change comes following Fed Chair Jerome Powell’s hawkish commentary last week at a hearing before the Senate Banking Committee.
“We now think the Fed will hike in July – our data forecasts have not changed, but our perception of the Fed’s reaction function now points to a significantly lower bar to hike,” said MS analysts in a note.
Source: Reuters (Reporting by Reshma Rockie George; Editing by Nivedita Bhattacharjee)