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Fed Will Pause Rate Hikes, Morgan Stanley's Caron Says

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Bloomberg Jun 13, 2023 16:03 · 25.6k Views

Morgan Stanley Global Balanced Funds co-CIO Jim Caron says the May CPI report takes some of the pressure off of the Federal Reserve to keep raising rates. He speaks with Jonathan Ferro on "Bloomberg The Open."

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Transcript

  • 00:00 Jim, Karen, what's your take?
  • 00:02 Well, I think what what we were thinking about going into this is that if the inflation numbers come down enough that the Fed goes from a skip
  • 00:09 in June to a pause and it may stay there indefinitely over time.
  • 00:13 I don't think these numbers were that strong on the downside to inflation.
  • 00:17 But as Kathy was saying, look, this is a, this is a step in the right direction
  • 00:20 and certainly it takes away some of the pressure for the Fed.
  • 00:23 Now look, the other thing that we also know is going to happen over the coming months is that inflation is going to come down just based on the year over year base effect measures.
  • 00:32 And I'd like to look beyond that.
  • 00:34 In other words, if all that's going to bring down inflation substantially over the next several months
  • 00:38 is base effects, then we have to be worried a year from now that those same base effects actually start to prop it up.
  • 00:44 So when we're speaking a year from today that it's still that inflation may stay sticky at still higher levels.
  • 00:50 So Jim, just to be clear,
  • 00:51 tomorrow, hike, skip, pause.
  • 00:53 Based on what you heard 32 minutes ago,
  • 00:57 yeah.
  • 00:57 So they're gonna, I think it's, I think it's a skip at this point and I think it's going to turn into a pot.