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2026-09-15 15:38:08
[Morgan Stanley Turns Hawkish: Expects Two Fed Rate Hikes This Year and Another ECB Rate Hike] (1) Due to persistent inflationary pressures, Morgan Stanley has joined other major Wall Street banks in adopting a more hawkish outlook on the Federal Reserve's interest rates, predicting that the Fed will raise rates later this year and the European Central Bank will also raise rates again. (2) These predictions come as the Fed and the Bank of Japan make policy decisions this week, and the ECB resumed its tightening cycle a few days ago, keeping global markets focused on the interest rate outlook. (3) Morgan Stanley expects the Fed to raise rates by 25 basis points at its September 15-16 meeting and by another 25 basis points in December, due to recent inflation data that is higher than expected. (4) The brokerage said in a report on Monday that the deleveraging process is "slower and less convincing" than policymakers may be asking for, prompting it to predict two rate hikes this year. (5) The bank said: “We believe there are reasons for both raising rates and holding rates steady, but signs of a second round of effects from energy prices, strong demand linked to AI-related investments, potentially higher neutral rates for the time being, and concerns about credibility mean that the balance of risks now leans toward a slightly more restrictive policy.”
