Morgan Stanley Delays U.S. Rate Cut Timing…"Inflation Pressure Mounts for Several Months"

Global investment bank (IB) Morgan Stanley has revised its previous forecast for the timing of the U.S. Federal Reserve (Fed) rate cut.

According to Bloomberg on the 3rd, Morgan Stanley stated in a client note that "there is a possibility of strong inflation pressure in the coming months" and "withdraws the previous forecast of a rate cut in June." The rate forecast was immediately revised after U.S. President Donald Trump announced a large-scale tariff policy on the 2nd (local time). Morgan Stanley said, "It will be difficult for the Fed to quickly shift to a quantitative easing policy while ignoring short-term inflation pressure."

Morgan Stanley expects the Fed to cut rates next year. Morgan Stanley analyzed that "(the Fed) sees the next rate cut cycle starting in March next year" and "the final rate will be at the level of 2.50~2.75%." It added, "The current forecast is possible under the premise that the economy maintains a moderate growth trend."