Bloomberg Surveillance · Wednesday, August 5, 2026
An economist from Morgan Stanley expresses confidence that inflation is slowing and nearing the 2% target, citing core CPI at 2.6% and projections to reach 2.3% soon. The labor market is not seen as a source of upward wage pressure, with expectations of softer readings ahead. The argument is made that current policy is 'modestly restrictive' and further rate hikes are unlikely to significantly impact inflation.
“You look at these various underlying measures of inflation, and there's always an issue when we say which measure are you looking at right? This is part of what came up in the press conference with Chair of Warsh last week. But when you look at the various measures that we have of underlying inflation, most of them are telling us that inflation is slowing and it's not that far off of target.”
“Two point six percent core CPI year on year, that's not far off of what would historically normally be historically normally be two point three percent, And we think we're going to see that two point three percent number in the next couple months.”
“We do not see risks that the labor market is retiming and becoming a source of upward pressure on wages and prices.”