As the world economy enters its seventh year of a gradual, moderate recovery from the global financial crisis, the expectation the path back to growth will be longer in duration and shallower in magnitude has been borne out. But over the past few years, expectations for higher interest rates in the near future have proven false. Global economies have dispersed to differentiated points along the economic cycle.

Yet while economic conditions vary, lower global inflationary pressure and high volatility in financial markets continue to shift many central banks into more dovish stances. Comparing year-end 2015 with August 2016, market-implied policy rate changes this year for seven leading central banks have shifted to a later normalization or deeper cut in policy rates, and for the Bank of England have flipped from an expected tightening to an accommodative move post-Brexit.

Morgan Stanley Research now expects the Federal Reserve to keep rates unchanged through year-end 20