Fed May Hold Steady as Inflation Pressures Ease

Morgan Stanley strategists have released a report stating that recent US economic data do not show sustained worsening of inflationary pressures, suggesting the Federal Reserve may opt to remain on hold at its July monetary policy meeting.

The Fed is gradually losing patience with inflation persistently above its target, and the trajectory of inflation over the coming months will be the key determinant of monetary policy direction.

Market expectations regarding a rate hike by year-end are divided, with money markets pricing in nearly two rate hikes by year-end primarily due to recent increases in international energy prices that have heightened concerns about a resurgence in inflation.