Type instantiation is excessively deep and possibly infinite, after Cursor added a zod form schema

Signup form with react-hook-form + zod. Since Cursor refactored the schema into a shared schemas.ts, VS Code shows this on useForm:

Type instantiation is excessively deep and possibly infinite. ts(2589)

The app still runs and the form works. tsc --noEmit also reports it, so the Vercel build fails because of it. The schema is not that big, 9 fields and one .refine() for password confirmation.