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

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.