Morgan Stanley expects the Fed to hike rates by 25bp in September and December (vs previous forecast for no policy changes this year)

Sell-side forecast revisions of this size are common around turning points in the policy debate, and their informational content lies less in the call itself than in what prompted the shift: a bank moving from an unchanged view to two hikes in a year is typically responding to inflation or labour data that has already repriced front-end expectations, meaning the research note tends to lag rather than lead the curve. Morgan Stanley's economics team has historically been among the more active revisers on the Street, so the read-through is partly about the bank's own form and partly about whether peer houses follow, since clustered revisions have tended to confirm a genuine shift in the consensus distribution while isolated calls fade. The mechanism runs through the front end of the USD curve and the policy-differential leg of the dollar, particularly against lower-yielding currencies where the rate gap does the work. The distinction worth drawing is between hikes framed as insurance against inflation and hikes framed as a reaction to it; the former has historically been dollar-supportive in an orderly way, the latter more volatile. Worth watching is whether the change is echoed by other houses and how it sits against prevailing market pricing for those meetings, since a forecast already discounted by OIS carries little incremental signal.