Morgan Stanley CEO James Gorman says there have been two changes recently that are “really important” to the economy. The executive said that inflation has clearly peaked and China has made a “big, big linchpin” economically.
Morgan Stanley CEO on US economy and inflation
Global investment bank Morgan Stanley Chairman and CEO James Gorman spoke about the US economy and China’s relationship with the US in an interview with CNBC on Thursday in Davos, Switzerland.
“Two things have changed recently that are really important,” he began, noting that the first concerns inflation, while the second concerns China’s recent economic turnaround.
“The inflation numbers are better,” said the Morgan Stanley boss, emphasizing:
Inflation clearly peaked. That’s no longer a question. It’s a fact.
He added that the question is whether the Federal Reserve can hit its 2% inflation target and “how hard it will try to hit 2% instead of stabilizing at around 3%, 4%.”
Regarding the Fed’s rate hikes, Gorman pointed out, “We were on a 75 basis point path. We then quickly went to 50.” At the next Federal Open Market Committee (FOMC) meeting, he expects the Fed to hike rates by 25 basis points, stating, “I could see them doing 25, followed by 25 , followed by a pause. I mean, that’s not implausible.”
“China made a big, big pivot”
Gorman explained that another important change that has taken place recently concerns China. He described:
The second thing that happened is that China made a big, big pivot. Now the focus was on the obviously critical reopening.
“The recent economic turnaround, the thawing of ties with the US, meeting … with Deputy Prime Minister and Secretary of State Yellen — this is a big deal,” Morgan Stanley CEO continued.
US Treasury Secretary Janet Yellen met with China’s Vice Premier Liu He on Wednesday “as part of efforts to deepen communications and work together to address global challenges,” the Treasury Department said last week. In November last year, President Joe Biden and President Xi Jinping also met in Bali and “agreed to authorize senior key officials to deal with these issues,” the Treasury Department further noted.
“According to President Xi’s mantra of shared prosperity, there are two ways to achieve this,” Gorman concluded:
On the one hand by redistributing the existing wealth so that everyone gets a piece of the cake. The other is to make the pie bigger so everyone gets a piece of the pie. I think they evolved from the former to the latter. This is good news for global growth.
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Do you agree with Morgan Stanley CEO James Gorman on inflation and China’s pivoting? Let us know in the comment section below.
Kevin Helms
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