Key insights
- Morgan Stanley's analysis of April CPI suggests slightly higher core inflation than expected. While tariff impacts are waning and oil price spillovers are contained, shelter costs accelerated. Despite early signs of disinflation, Morgan Stanley anticipates the Federal Reserve will maintain its current wait-and-see approach, implying no immediate rate cuts, which is mildly supportive for equities.
Investing.com -- Core consumer prices increased 0.38% month-over-month in April, according to Morgan Stanley analysis released Tuesday, slightly above the firm's forecast of 0.36% and consensus expectations of 0.3%.
The investment bank noted that tariff pass-through effects continued but are slowing, with the tariff impulse approaching its end.
Oil price spillovers into core inflation remained contained, with noticeable acceleration limited primarily to airfares, Morgan Stanley said.
Shelter costs accelerated due to shutdown payback effects, though the firm anticipates continued deceleration in this category going forward.
Morgan Stanley stated that the oil shock's full impact remains uncertain. The firm expects the Federal Reserve to maintain a wait-and-see approach despite early indications of core disinflation.