Morgan Stanley: Fed's Hold Won't End Rate Hikes, Markets Eye December Move

Morgan Stanley Chief US Economist Michael Gapen says the Federal Reserve is likely to hold rates on Wednesday but will signal that further hikes are ahead. Markets have priced in a pause and lean toward a December hike. Gapen notes that dissenting votes will be a key clue, expecting two officials to dissent on Wednesday. He argues the economy can absorb 75 to 100 basis points of total hikes, but six or seven total hikes would return rates to 2023 levels. Energy market pressures from the Middle East conflict could influence the Fed's pace.