Morgan Stanley stated in its latest research report that the Federal Reserve's 25 basis point rate hike last week was not the start of a new tightening cycle, but rather a "policy fine-tuning" to maintain the disinflationary process. The report suggests that the core of Federal Reserve Chairman Warsh's policy lies in the balance sheet rather than solely interest rate tools. Once his balance sheet reform plan is implemented, the necessity for aggressive rate hikes will significantly decrease, and the ultimate degree of policy tightening is highly likely to fall at the lower end of market expectations.