Morgan Stanley Sees Fed Rate Hikes Trail Market Pricing
The bank expects one increase in December and another in March 2027, while markets expect 100 basis points of cumulative increases over the next 12 months.
Morgan Stanley expects the Federal Reserve to raise interest rates in December and March 2027, but sees the total tightening falling short of current market expectations.
The forecast follows the Fed’s September 2026 increase. Markets expect 100 basis points of cumulative increases over the next 12 months.
Uncertainty surrounding the Fed, economic growth, corporate bond issuance and oil prices is lifting expectations for additional tightening. Morgan Stanley expects the factors shaping the Fed’s policy path to become clearer later this year, and says actual tightening will fall short of market expectations.
