McCarthy's main priority is new defenders with Birmingham's Roger Johnson and Reading's Matt Mills his leading targets.
But Birmingham were understood to be initially asking ?14million for Johnson while Reading rate Mills in excess of ?3million.
Morgan understands clubs wanting to get the best deals but believes they have to reduce their current demands.
He said: "I think it's inevitable that clubs might have to come down on their demands.
"If clubs feel there's a lot of interest in their players, they're trying to do their best and trying to get the income for their club and no-one can blame them for that.
"But we also need a dose of reality and we can't keep busting transfer records because there's only a certain amount of money to go around.
"As always, at this stage, prices start really high, and offers start a lot lower, and usually, at some point in time, they meet."
Morgan added: "I'd prefer not to break the transfer record for obvious reasons.
"But we've got to do what we need to do to get the right players.
"Sometimes paying the highest money doesn't necessarily get you the right players and there are one or two high profiles example of that.
"It's important we get the right players for Wolves.
"Conversations have been had with other clubs about players and figures have been mentioned.
"As usual it's 'cat and mouse' at this stage of the summer."
Morgan insists Wolves have received no bids for star players, striker Kevin Doyle and winger Matt Jarvis.
He said: "We never turned down any offers. We never had any offers.
"It was media hype and in the real world the players were never going anywhere."
Morgan believes keeping veteran central defender Jody Craddock, who has agreed a new one-year deal, is crucial.
He said: "We're delighted to have him for another year. Jody is a great pro.
"He's got an older head compared to the rest of the players and, having someone like him around the training ground and dressing room, is someone the younger players can turn to.
"They can see Jody has been there, done that, got the T-shirt and I think you just need some older heads around the place.
"On the whole we've got a very young squad so the influence Jody gives, off the pitch as well as on it, is fantastic."
Source: Team Talk
Source: Team Talk