Fed’s Next Rate Hike to Come in September, Morgan Stanley Says
(Bloomberg) -- Fed Chair Janet Yellen’s testimony to Congress “laid forth a tall order” that employment and inflation both need to evolve in line with central bank’s expectations, Morgan Stanley economist Ellen Zentner and strategist Matthew Hornbach wrote on Tuesday.
- Data on core inflation may disappoint, making near-term rate increase difficult
- Yellen, Fed board need “clearer lens” into “machinations of Congress” to incorporate fiscal policy into outlook
- Two hikes expected this year, with next move in September rather than June, which has higher probability from consensus
- Continue to suggest investors position for a steeper 5s30s yield curve; those positioned for more than one rate hike by June will be disappointed
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Ellen Zentner (Morgan Stanley)
Janet Yellen (Federal Reserve System)
Matthew Hornbach (Morgan Stanley)
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