Morgan Stanley IM: The Balance of Risks Tips to Easier, not Tighter, Policy
Jim Caron, Co-Lead Global Portfolio Manager and Co-Chief Investment Officer, Global Balanced Risk Control Team, shares his macro thematic views on key market drivers.14.06.2023 | 06:33 Uhr
The Balance of Risks Tips to Easier, not Tighter, Policy
- The Fed meeting is this week and potential highlights include:
- The “dots” drift higher, keeping more hikes alive, though the Fed might pause in June.
- Despite an upward drift in inflation forecasts, the Fed will maintain a 2% inflation target.
- An indication of stronger expectations for the labor market.
- However, this applies only to the U.S.
- On the other hand, global central banks may merge their policy reaction function to the “balance of risks,” a policy that balances growth and inflation risks.
- The implication is that in relative terms, global policy is easier, not tighter and thus supportive of riskier assets.
- In all, this broader perspective may help drive investment decisions.
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