Morgan Stanley CEO James Gorman said that two “really important” changes have occurred recently for the economy. The executive explained that inflation has clearly peaked, and that China has launched a “big, big axis” economically.
Morgan Stanley CEO talks about the U.S. economy and inflation
James Gorman, chairman and CEO of global investment bank Morgan Stanley, discussed the U.S. economy and its relationship with China in an interview with CNBC on Thursday in Davos, Switzerland.
The Morgan Stanley chief said that “the inflation numbers are getting better,” stressing:
Clearly, inflation has peaked. That is no longer a question. It is a fact.
He added that the question is whether the Federal Reserve can reach its 2% inflation target and “how hard it will work to get to 2% as opposed to stabilizing around 3% or 4%.”
Regarding the Fed raising interest rates, Gorman noted.
“We were on track for 75 basis points. We moved to 50 shortly thereafter.” At the next Federal Open Market Committee (FOMC) meeting, the Fed is expected to raise rates by 25 basis points, stating. ‘It could be 25 basis points, 25 basis points, and then a pause. I mean, it’s not implausible,” he stated.
‘China Has Made a Major, Major Pivot’
Gorman explained that another important change that has occurred recently concerns China. He explained that.
The other thing is that China has taken a major turn. Now the focus was on resuming which was obviously important.
“The recent economic pivot, the thaw in relations with the U.S., the meeting between the deputy prime minister and Secretary Yellen … This is a big issue,” the Morgan Stanley CEO continued.
The U.S. Treasury Department explained last week that Treasury Secretary Janet Yellen met with Chinese Vice Premier Liu He on April 2 “as part of efforts to deepen communication and work together on global challenges.” Last November, President Joe Biden and President Xi Jinping also met in Bali and “agreed to authorize key officials to engage on these issues,” Treasury further noted.
“Under President Xi’s mantra of common prosperity, there are two ways to achieve it,” Gorman elaborated, concluding.
One is to redistribute the existing prosperity so that everyone gets a piece of the pie. The other is to make the pie bigger so that everyone gets a share of the pie. I believe they have shifted their focus from the former to the latter. This is good news for global growth.
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