Global Market: Morgan Stanley Turns Hawkish, Sees Two Fed Rate Hikes in 2026

Morgan Stanley turns more hawkish, forecasts two Fed hikes and ECB move

Global Market: Morgan Stanley turns hawkish, sees two Fed rate hikes in 2026

Morgan Stanley expects the US Federal Reserve and European Central Bank to raise interest rates further as persistent inflation and elevated oil prices complicate the monetary policy outlook. The brokerage sees additional Fed hikes this year and another ECB increase in December.

Markets are braced for one Fed hike: Morgan Stanley is looking much further ahead

US markets are heading into this week’s Federal Reserve decision largely prepared for a quarter-point interest-rate increase. Morgan Stanley thinks investors may be paying too much attention to Wednesday and not enough to what comes next. The bank now expects the Fed to raise rates by 25 basis points in both September and December, a more hawkish path that would turn this week’s move from a one-off response to sticky inflation into the start of …