US Consumer Price Index seen under 2.0% YoY by end-2023 – Morgan Stanley

Analysts at Morgan Stanley predict that the United States Consumer Price Index (CPI) to soften further, revising down their CPI forecast for 2023.

Key quotes

“US CPI is currently 7.7%Y, but we forecast it to be under 2.0%Y by the end of next year.”

“Morgan Stanely cited five reasons:

Global demand should be weaker;

Supply chains are showing much less stress;

Inventories look increasingly elevated, inviting discounting for core goods;

And risk in shelter prices is much more balanced; and base effects shift materially.”

“We think that the Fed pauses after a January rate hike at 4.625%.”