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%.”