Economists at Morgan Stanley see 2023 Fed hike, differ with CEO

Morgan Stanley economists are sticking with their prediction that the Federal Reserve won't raise interest rates until 2023, breaking ranks with their own chief executive officer. In an outlook released on Sunday, strategist Andrew Sheets said his colleagues in the bank's economics team reckon the US central bank will end its asset purchases by the middle of next year, but won't raise its benchmark rate from near zero until early 2023. That's because they expect inflation to moderate and participation in the labour market to show a sustained rise, Sheets said. They expect the world's largest economy to grow 4.6% next year, led by consumer spending and capital investment.

The economists sound more dovish than Morgan Stanley CEO James Gorman. He expressed concern last month that "money is a bit too free and available right now," and said the Fed should "start moving" in the first quarter of 2022. It's not the first time Gorman has been more hawkish than his economists, and he's often proved right.