diff --git a/base/compiler/typeinfer.jl b/base/compiler/typeinfer.jl
index d091fb8d2f5f8..1e319c2974b31 100644
--- a/base/compiler/typeinfer.jl
+++ b/base/compiler/typeinfer.jl
@@ -864,7 +864,8 @@ function typeinf_edge(interp::AbstractInterpreter, method::Method, @nospecialize
         update_valid_age!(caller, frame.valid_worlds)
         isinferred = is_inferred(frame)
         edge = isinferred ? mi : nothing
-        effects = isinferred ? frame.result.ipo_effects : adjust_effects(Effects(), method) # effects are adjusted already within `finish` for ipo_effects
+        effects = isinferred ? frame.result.ipo_effects : # effects are adjusted already within `finish` for ipo_effects
+            adjust_effects(effects_for_cycle(frame.ipo_effects), method)
         exc_bestguess = refine_exception_type(frame.exc_bestguess, effects)
         # propagate newly inferred source to the inliner, allowing efficient inlining w/o deserialization:
         # note that this result is cached globally exclusively, so we can use this local result destructively
@@ -877,11 +878,16 @@ function typeinf_edge(interp::AbstractInterpreter, method::Method, @nospecialize
     # return the current knowledge about this cycle
     frame = frame::InferenceState
     update_valid_age!(caller, frame.valid_worlds)
-    effects = adjust_effects(Effects(), method)
+    effects = adjust_effects(effects_for_cycle(frame.ipo_effects), method)
     exc_bestguess = refine_exception_type(frame.exc_bestguess, effects)
     return EdgeCallResult(frame.bestguess, exc_bestguess, nothing, effects)
 end
 
+# The `:terminates` effect bit must be conservatively tainted unless recursion cycle has
+# been fully resolved. As for other effects, there's no need to taint them at this moment
+# because they will be tainted as we try to resolve the cycle.
+effects_for_cycle(effects::Effects) = Effects(effects; terminates=false)
+
 function cached_return_type(code::CodeInstance)
     rettype = code.rettype
     isdefined(code, :rettype_const) || return rettype
diff --git a/test/compiler/AbstractInterpreter.jl b/test/compiler/AbstractInterpreter.jl
index 4d29d665b8035..7ffb7c61abcc1 100644
--- a/test/compiler/AbstractInterpreter.jl
+++ b/test/compiler/AbstractInterpreter.jl
@@ -152,10 +152,18 @@ function CC.concrete_eval_eligible(interp::Issue48097Interp,
 end
 @overlay Issue48097MT @noinline Core.throw_inexacterror(f::Symbol, ::Type{T}, val) where {T} = return
 issue48097(; kwargs...) = return 42
-@test_broken fully_eliminated(; interp=Issue48097Interp(), retval=42) do
+@test fully_eliminated(; interp=Issue48097Interp(), retval=42) do
     issue48097(; a=1f0, b=1.0)
 end
 
+# https://github.com/JuliaLang/julia/issues/52938
+@newinterp Issue52938Interp
+@MethodTable ISSUE_52938_MT
+CC.method_table(interp::Issue52938Interp) = CC.OverlayMethodTable(CC.get_inference_world(interp), ISSUE_52938_MT)
+inner52938(x, types::Type, args...; kwargs...) = x
+outer52938(x) = @inline inner52938(x, Tuple{}; foo=Ref(42), bar=1)
+@test fully_eliminated(outer52938, (Any,); interp=Issue52938Interp(), retval=Argument(2))
+
 # Should not concrete-eval overlayed methods in semi-concrete interpretation
 @newinterp OverlaySinInterp
 @MethodTable OverlaySinMT
diff --git a/test/compiler/effects.jl b/test/compiler/effects.jl
index 71287675a0c41..69ab79b83f093 100644
--- a/test/compiler/effects.jl
+++ b/test/compiler/effects.jl
@@ -89,13 +89,13 @@ Base.@assume_effects :terminates_globally function recur_termination1(x)
     0 ≤ x < 20 || error("bad fact")
     return x * recur_termination1(x-1)
 end
-@test_broken Core.Compiler.is_foldable(Base.infer_effects(recur_termination1, (Int,)))
+@test Core.Compiler.is_foldable(Base.infer_effects(recur_termination1, (Int,)))
 @test Core.Compiler.is_terminates(Base.infer_effects(recur_termination1, (Int,)))
 function recur_termination2()
     Base.@assume_effects :total !:terminates_globally
     recur_termination1(12)
 end
-@test_broken fully_eliminated(recur_termination2)
+@test fully_eliminated(recur_termination2)
 @test fully_eliminated() do; recur_termination2(); end
 
 Base.@assume_effects :terminates_globally function recur_termination21(x)
@@ -104,15 +104,15 @@ Base.@assume_effects :terminates_globally function recur_termination21(x)
     return recur_termination22(x)
 end
 recur_termination22(x) = x * recur_termination21(x-1)
-@test_broken Core.Compiler.is_foldable(Base.infer_effects(recur_termination21, (Int,)))
-@test_broken Core.Compiler.is_foldable(Base.infer_effects(recur_termination22, (Int,)))
+@test Core.Compiler.is_foldable(Base.infer_effects(recur_termination21, (Int,)))
+@test Core.Compiler.is_foldable(Base.infer_effects(recur_termination22, (Int,)))
 @test Core.Compiler.is_terminates(Base.infer_effects(recur_termination21, (Int,)))
 @test Core.Compiler.is_terminates(Base.infer_effects(recur_termination22, (Int,)))
 function recur_termination2x()
     Base.@assume_effects :total !:terminates_globally
     recur_termination21(12) + recur_termination22(12)
 end
-@test_broken fully_eliminated(recur_termination2x)
+@test fully_eliminated(recur_termination2x)
 @test fully_eliminated() do; recur_termination2x(); end
 
 # anonymous function support for `@assume_effects`