Morgan Stanley says Fed risks are skewed towards later and more cuts

Morgan Stanley suggests that the Federal Reserve’s policy path is likely to involve rate cuts occurring later than anticipated, but potentially being larger in magnitude. The firm expects core inflation to slow from Q2 despite strong Q1 readings, due to fading tariff impacts and slowing shelter inflation. Consequently, Morgan Stanley foresees two rate cuts this year, with clearer evidence of disinflation needed before the easing cycle begins.