Morgan Stanley Sees Fed Discounting War in Considering Any Hike

The Federal Reserve would probably discount the effects of the Iran war on prices if policymakers decide raising interest rates becomes necessary this year, according to Morgan Stanley’s global head of fixed income research.

“Our thinking is that the Fed would look through that,” Andrew Sheets said Thursday on Bloomberg Television’s Surveillance. “The Fed would see that as more of a growth shock than an inflationary shock. And so that’s probably not the factor that we think would move the Fed towards hiking.”

Rising costs have prompted some Fed officials to say hikes may be needed in 2026 to ...