Morgan Stanley has revised its forecast for Federal Reserve interest rate cuts, now expecting the first reduction in September 2025, followed by a second in December. This adjustment marks a three-month delay from the previous projection of cuts beginning in June. The revision reflects persistent inflation and strong employment data, suggesting the Fed will maintain its current policy stance longer than anticipated. The investment bank's economists cited several factors influencing their decision, including higher-than-expected Consumer Price Index readings, robust job creation, and resilient consumer spending. These elements indicate that the Federal Reserve's dual mandate of price stability and maximum employment supports a cautious approach to monetary policy changes. Market reactions to the announcement included upward adjustments in Treasury yields and mixed responses in equity markets.