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MS See Data Firmly Supporting 25bp Fed Hike Next Week

US OUTLOOK/OPINION
  • Writing on today's CPI release, Morgan Stanley note a generally strong reading across the services points to resilient inflation pressures.
  • Shelter inflation still has to show signs of turning decisively and core services ex-housing accelerated. However, the large increase in airfares in the CPI will not feed through to PCE.
  • They see the data firmly supporting another 25bp hike in March, with risks of a more elongated tightening cycle beyond our current forecast of a last hike in May.

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