FORGET 2015: Morgan Stanley is now convinced rate hikes won't happen this year

Before Wednesday, most economists were debating whether the Federal Reserve would begin hiking interest rates in June or September.

But following the conclusion of its Federal Open Market Committee meeting, the Fed communicated enough concern for the economy that economists now think rates hike are more likely to come later.

Some economists were left feeling more emboldened about the calls for a later hike.

"Our forecast remains for a September hike, but the risks now appear slightly skewed toward a later liftoff," Goldman Sachs' Jan Hatius said.

Morgan Stanley's Ellen Zenter goes much further.

Based on her reading of the economic data, which the Fed has said it is dependent on, makes lift off this year unlikely. Here's the key portion from her note Wednesday:

"We maintain our expectation that the Fed will err on the side of caution and take to heart the asymmetric risks to tightening policy too early when at the zero lower bound. We see persistently low core inflation as the main stumbling block for those on the Committee that want to become more confident that this period of lowflation does indeed turn out to be transitory. With our expectation that core inflation falls further from goal,and the lingering threats to growth and inflation from the rapid appreciation of the US dollar, we look for the Fed to forego rate hikes this year."

The US dollar rallied as investors anticipated interest rate hikes. Zentner also notes that more than 20 central banks around the world have eased monetary policy since December, and that's bid up demand for the dollar, since the Fed is moving in the opposite direction.

Since last year, it has surged at a pace faster than the market has seen in nearly 40 years, according to Citi.

And it is the pace of appreciation, not just the strong dollar itself, that has the Fed on edge, according to Zentner.

The Fed downgraded its assessment of growth in the first quarter from being at a "solid pace" to being "moderated somewhat." Zentner wrote that the strong dollar is responsible for this, as well as the West Coast ports slowdown that affected US exports.

The strong dollar could also puts deflationary pressure on the US economy, and pushes inflation further away from the Fed's 2% target.

Still, the Fed's latest "Summary of Economic Projections" shows that 15 of the FOMC's 17 members see rates rising this year. This is illustrated in the "dot plot" below.