Morgan Stanley CEO James Gorman says there have been two changes recently that “really matter” for the economy. The executive explained that inflation has clearly peaked and that China has made a “very, very important turnaround” economically.
Morgan Stanley CEO on the US economy and inflation
Global investment bank Morgan Stanley Chairman and CEO James Gorman discussed 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 really matter,” he began, noting that the first concerns inflation, while the second concerns China’s recent economic turnaround.
“The inflation numbers are better,” the Morgan Stanley chief said, emphasizing:
Clearly, inflation has peaked. That is no longer a question. It is a fact.
He added that the question is whether the Fed can hit its 2% inflation target and “how hard will they try to get to 2% versus stabilizing around 3%, 4%.”
Regarding the Fed’s raising interest rates, Gorman noted: “We were on a 75 basis point path. Then we quickly went to 50”. At the next Federal Open Market Committee (FOMC) meeting, he expects the Fed to raise 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 has taken an important, important turn’
Gorman explained that another major change that has occurred recently concerns China. He described:
The second thing that happened is that China has taken a big turn. The focus now turned to reopening, which was obviously critical.
“The recent economic turnaround, the unfreezing of the relationship with the US, the meeting… with the Deputy Prime Minister and Secretary Yellen – this is a big deal,” the Morgan Stanley CEO continued.
US Treasury Secretary Janet Yellen met with Chinese Vice Premier Liu He on Wednesday “as part of efforts to deepen communication and work together to address global challenges,” Treasury explained. In the past week. In November of last year, President Joe Biden and President Xi Jinping also met in Bali and “agreed to empower key senior officials to participate in these matters,” the Treasury further noted.
“Under President Xi’s mantra of common prosperity, there are two ways to achieve this,” Gorman detailed, concluding:
One is by redistributing existing prosperity so that everyone gets a piece of the pie. The other is to grow the pie so that everyone gets a piece of the pie. They have pivoted, I think, from the former to the latter. That’s good news for global growth.
Do you agree with Morgan Stanley CEO James Gorman on inflation and China’s turnaround? Let us know in the comments section.
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