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Morgan Stanley: Fed Unlikely to Cut Rates in May Amid Inflation Concerns

Coin WorldMonday, May 5, 2025 10:22 pm ET
1min read

Morgan Stanley's analyst team, led by Chief US Economist Michael Gapen, has released a research report indicating that the Federal Reserve is unlikely to take preemptive action in response to persistent inflation and the potential long-term inflationary effects of tariffs. According to the report, the likelihood of a rate cut in May is low.

Despite President Trump's partial easing of tariff measures since April 2nd, which has helped stabilize the bond and stock markets to some extent, market anxiety about future developments remains high. Gregory Peters, Co-Chief Investment Officer at pgim Fixed Income, which manages a significant amount of assets, advised investors to continue exercising caution and reducing risk.

Analysts at morgan stanley believe that the Fed will not act preemptively due to the expectation of sustained inflation and the potential for tariffs to have a lasting impact on inflation. This stance is supported by the ongoing market anxiety, which has not been fully alleviated despite recent tariff adjustments. Investors are advised to remain cautious and manage risk accordingly.

Ask Aime: What will be the impact of the Fed's potential inaction on the market?

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Comfortable_Corner80
05/06
Tariffs linger, inflation fears keep Fed on sidelines.
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smokinsomnia
05/06
@Comfortable_Corner80 Think Fed will react soon?
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Ditty-Bop
05/06
Fed playing it cool, huh? Rate cut chances slim. Inflation's the villain, but will they wait too long to act? 🤔
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foureyedgrrl
05/06
Rate cut hype overblown, inflation's the real deal.
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VirtualLife76
05/06
Fed playing it cool, huh? Rate cut chances slim. Keep eyes on inflation, not just headlines. 📈
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Witty-Performance-23
05/06
$TSLA better be in your portfolio, not just hopes.
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Hoshigetsu
05/06
Fed's asleep at the wheel, inflation ticking up.
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sniperadjust
05/06
Fed watching inflation metrics like hawks, no joke.
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Rockoalol
05/06
Risk management 101: Always be prepared for wild rides.
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yeahyoubored
05/06
Damn!!the Peak Seeker algorithm successfully identified both trough and apex inflection points in MS equity's price action, while my execution latency resulted in material opportunity cost.
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