Morgan Stanley: Threat of high inflation is real
UPDATED 4:10 PM PT – Sunday, March 14, 2021
Investment bank Morgan Stanley warned U.S. inflation may run out of control due to Joe Biden’s economic policies.
A new report by Morgan Stanley found U.S. inflation is overshooting the Federal Reserve’s 2 percent target, and it could reach 2.5 percent later this year. Bankers said a combination of ultra-low interest rates and a multi-trillion dollar fiscal stimulus is creating excess money liquidity.
As a result, consumer prices are poised to increase, while asset values are entering a “bubble mode,” threatening a financial crash. Economists said all this may produce more poverty.
“I think the possibility of rates that rise too fast if inflation runs too hot and rising oil prices, that combination is usually not good for the stock market,” Jim Lacamp, senior vice president for Morgan Stanley Wealth Management said. “Some of the inflationary pressures are going to be real, rent prices are going up. Even used car prices, a lot of them measures of inflation. The inputs that we see on the CPI are starting to flare up.”
Economists added the Federal Reserve must raise interest rates to curb inflation and prevent a crisis, but the central bank says it has no such plans so far.