Morgan Stanley expects US Fed to maintain rates at current levels through 2025

According to Morgan Stanley analysts, the US Federal Reserve (Fed) will keep interest rates in the 4.25–4.50% range for the rest of this year as inflation remains the regulator's key concern. Fed officials left borrowing costs unchanged at the May meeting, attributing their decision to the economy's relative resilience and the need to bring price growth closer to the 2% target.

Fed Chairman Jerome Powell highlights risks of accelerating inflation in the United States amid the new president's sweeping tariff policy. Despite the pause in the implementation of several duties, some of them remain in force. Meanwhile, the impact of Donald Trump's policies on the American economy is still unclear, the bank reports.

Morgan Stanley analysts express confidence that US inflation will gradually decline toward the Fed's target. However, they also emphasize that the country's situation differs from others due to aggressive tariff policies. This divergence could slow the progress toward the 2% target and might force the central bank to maintain rates in the current range for longer than previously expected, the experts conclude.