**[Morgan Stanley: The Federal Reserve Will Still Cut Rates in June and September]** According to a report by Golden Finance on March 17, Morgan Stanley maintains its forecast that the Federal Reserve will resume rate cuts in June and cut rates again in September, despite surging oil prices prompting traders to reduce bets on the extent of rate cuts by policymakers this year. "We still predict actions in June and September, though there is certainly a risk of delay," said Michael Gapen, Morgan Stanley's Chief U.S. Economist, during a Bloomberg News roundtable discussion in New York on Monday. This forecast contrasts with the market's rush to dismiss the possibility of rate cuts, as the surge in oil prices following the Iran war could reignite inflation and potentially hinder the Federal Reserve's ability to ease monetary policy. Futures tied to the Federal Reserve's policy rate currently anticipate a 25-basis-point rate cut in December, whereas just last month, they predicted at least a 50-basis-point rate cut this year. The market's probability expectation for a 25-basis-point rate cut in September stands at 60%. Economists from TD Securities and Barclays Bank both postponed their forecasts for the Federal Reserve's next rate cut from June to September last week. Meanwhile, last week's sharp sell-off in U.S. Treasuries pushed the yield on the policy-sensitive two-year Treasury note to nearly 3.75%, exceeding the Federal Reserve's reserve interest rate—a level rarely breached. A measure of market expectations for the Federal Reserve's terminal rate during the current easing cycle has risen by about 50 basis points since late February, surpassing 3.4%. "The magnitude of the two-year yield movement surprised me a bit; I can certainly see changes in longer-term rates, but I was again surprised by the terminal rate being repriced to such a high level," Gapen said. Of course, the Federal Reserve could delay its first rate cut to September or even December, either of which could push the next rate cut to 2027, Gapen said. "The risks to our forecast are primarily delays, and the longer the Federal Reserve waits, the more likely it will need to add an extra rate cut."