Morgan Stanley Bets Fed Won't Hike This Year Amid Policy Divergence; Deutsche Bank Warns QT Could Weaken Dollar

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According to BlockBeats, on July 20, three major financial institutions clashed on the Federal Reserve's policy path. Morgan Stanley's chief U.S. economist Michael Gapen expects the Fed to hold rates for the full year, citing fading tariff impacts, declining housing inflation, and easing oil prices following developments in Iran. Former New York Fed President William Dudley countered that autumn rate hike pressure could resurface, pointing to elevated unemployment near full employment levels and core inflation still anchored between 2.4%–3.3%. Deutsche Bank's head of FX George Saravelos flagged a separate concern: if the Fed shifts toward balance sheet reduction instead of rate hikes, the dollar could face persistent weakness.
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