In a fresh macro research report released on Monday, investment banking giant Morgan Stanley updated its Federal Reserve outlook, projecting two additional 25 bps rate hikes in September and December amid stubborn global inflation drivers.
This shift in Wall Street expectations comes as disinflation proves slower than expected, driven by second-round energy costs, soaring AI infrastructure spending, and elevated neutral rate estimates. The inflationary backdrop is reinforced globally by rising UK energy forecasts, where household power bills are projected to jump roughly 25% by January, threatening to push British inflation above 4%—double the central bank's official target.
For traditional financial markets, hawkish policy recalibrations are pushing bond yields higher and bolstering the US dollar index, keeping downward pressure on broad risk assets. Fixed-income markets must price in persistent structural inflation as central banks from the Fed to the ECB remain backed into a corner.
For the crypto sector, tighter liquidity dynamics and a resilient dollar mean risk appetite remains constrained in the near term. $BTC and major digital assets could face choppy price action as institutional flows hesitate to deploy aggressive capital into speculative assets while risk-free yields remain elevated.
#Fed #InterestRates #Inflation
This shift in Wall Street expectations comes as disinflation proves slower than expected, driven by second-round energy costs, soaring AI infrastructure spending, and elevated neutral rate estimates. The inflationary backdrop is reinforced globally by rising UK energy forecasts, where household power bills are projected to jump roughly 25% by January, threatening to push British inflation above 4%—double the central bank's official target.
For traditional financial markets, hawkish policy recalibrations are pushing bond yields higher and bolstering the US dollar index, keeping downward pressure on broad risk assets. Fixed-income markets must price in persistent structural inflation as central banks from the Fed to the ECB remain backed into a corner.
For the crypto sector, tighter liquidity dynamics and a resilient dollar mean risk appetite remains constrained in the near term. $BTC and major digital assets could face choppy price action as institutional flows hesitate to deploy aggressive capital into speculative assets while risk-free yields remain elevated.
#Fed #InterestRates #Inflation