Morgan Stanley: Powell's views are easy to say but hard to implement, inflation data becomes a barrier.

On March 24, Federal Reserve Chairman Jerome Powell previously said that the Fed may not overreact to the increase in inflation caused by tariffs, because this inflation is likely to be limited to a one-time price increase and is not a self-reinforcing trend. His view suggests that the Fed is likely to continue cutting interest rates even if it doesn't make more progress in controlling inflation. However, Morgan Stanley analysts wrote that this is easier said than done. In recent years, the Fed has placed a high value on actual data. As a result, if monthly inflation data continues to show stubborn price increases, it may be difficult for the Fed to explain why it is now moving away from its data-dependent decision-making model. "In our view, the Fed will need to maintain a moderately restrictive policy stance for an extended period of time until there is sufficient confidence in the inflation situation to justify further rate cuts," the bank's analysts wrote. ”