Morgan Stanley: The Fed is Not Expected to "Preemptively Act"

On May 6, a team of analysts led by Morgan Stanley's Chief U.S. Economist Michael Gapen wrote in a research report: "Given that the Federal Reserve expects inflation to remain strong and the tariff impact may have a lasting inflationary effect, it is unlikely that the Fed will take preemptive action (the possibility of a rate cut in May is low)." Although Trump has partially eased tariff measures since the "Liberation Day" on April 2, stabilizing the bond and stock markets to some extent, investors say the overall anxiety about the future developments has not dissipated. Gregory Peters, Co-Chief Investment Officer of PGIM Fixed Income, which manages $837 billion in assets, stated: "We advise investors to remain cautious and reduce risk."