Morgan Stanley Predicts No Fed Rate Cuts Amid Tariff Concerns

Morgan Stanley anticipates no U.S. Federal Reserve rate cuts this year due to inflation concerns from Trump's tariffs. Trump imposed a 10% tariff on all U.S. imports plus higher duties on select countries. Previously, a June rate cut of 25 basis points was expected by Morgan Stanley.

Morgan Stanley has revised its forecast regarding the U.S. Federal Reserve's policy for 2023, now projecting that the Fed will hold off on any rate cuts this year. The change comes in response to concerns about potentially elevated inflation following President Trump's imposition of new tariffs.

On Wednesday, President Trump announced a 10% baseline tariff on all imports to the United States. Additionally, he set higher duties on imports from several other countries, which has led to concerns about rising inflation impacting U.S. economic conditions.

Initially, the Wall Street brokerage had anticipated a 25 basis point rate cut from the Federal Reserve in June. However, given the recent developments, Morgan Stanley now believes that inflation pressures from the tariffs will prevent rate reductions.