Financial markets may be too optimistic about the speed and pace of the Fed's policy relaxation through interest rate cuts this year. Morgan Stanley's macro strategy team led by Shrenick Shah said that key areas of inflation closely monitored by the Fed have not shown clear signs of deflation. They said that the Fed's commitment to combating potential inflation rebounds is still underestimated, opening the door to adjustments in risk assets. Previously, as inflation fell back in 2023 and the Fed hinted at a shift to interest rate cuts at its December meeting, expectations of rate cuts became widespread. According to data from the Federal Funds Futures Market, traders expect a rate cut of 140 basis points this year, nearly twice the rate cut shown in the Fed's December rate forecast (the so-called dot plot).