Morgan Stanley: Fed rate hike pace may fall below market expectations.

TechFlow reports that on September 29, Morgan Stanley interest rate strategists stated in a report that following the Fed's rate hike in September, they expect the central bank to raise rates once in December and again in March next year. However, current market pricing indicates an even more aggressive pace of rate hikes over the coming year. The strategists noted that uncertainty surrounding the Fed, economic growth, corporate bond issuance, and oil price trends is driving up expectations for further monetary policy tightening over the next 12 months.

However, Morgan Stanley believes the actual magnitude of Fed tightening will not reach market expectations, as key factors influencing the Fed's policy path will only become clearer later this year. According to data from the London Stock Exchange Group (LSEG), money markets are currently expecting cumulative Fed rate hikes of 100 basis points over the next 12 months.