Morgan Stanley Chief Global Economist Seth Carpenter expects lower immigration flows and more tariffs to slow gross domestic product growth in the U.S. and make inflation “stickier” over the next two years. Inflationary pressures and policy uncertainty under the Trump administration could “spark greater Fed caution,” leading to an inters rate cut pause in Q2 of 2025, the economist tells investors in a research note. Morgan Stanley believes rate cuts could resume in the second half of 2026 as higher tariffs hit growth and job gains “almost stop.” It forecasts real GDP growth will slow to 1.9% in 2025 and 1.3% in 2026.