The bank expects the Fed to deliver 6 rate hikes in the year, of 25 bps each, with the first hike likely in March, followed by additional hikes in May, June, July, September and December, as per a Reuters report.
According to Morgan Stanley, a rate hike of 150 basis points is appropriate this year to keep rising inflation under control. The bank had previously predicted this figure at 125 basis points.
According to data released last week, the US CPI inflation jumped at its fastest pace in 40 years, or since 1982. Besides, the former U.S. Treasury Secretary Lawrence Summers last week made remarks on the Fed to likely hike interest rates at all the seven remaining policy meetings in 2022.
Fears of the Fed taking more aggressive rate hikes in the year to curb rising inflation have spooked global markets, with more hold on emerging markets like India.
Economists believe that the red-hot US inflation figure for January could lead to interest rate hikes by at least 100 basis points this year. Even a 50 bps hike in March would lead to a sharp correction in global markets, stated the Chief Investment Strategist at Geojit Financial Services.