As markets await the key US Retail Sales and Producer Price Index (PPI) data for December, Morgan Stanley (MS) conveys hawkish bias about the Federal Reserve (Fed).

That said, economists at the MS stated that they see inflation coming down to about 3% by the end of 2023, and to about 2% by the end of 2024.

The investment bank’s economists also stated that they don’t see the Fed considering reducing rates until the US reaches that 3% inflation range.

Previously, Morgan Stanley CEO James Gorman mentioned that the Fed’s next move will likely be a 0.25 percentage point rate hike, followed by a pause. MS CEO Gorman also said, “I’m not sure if the Fed will cut rates this year,” adding that he is little more confident about the medium-term outlook for the markets.

Also read: Forex Today: Inflation in the eye of the storm