Morgan Stanley: The Threat of High Inflation is Real

NEW YORK - JUNE 9: Morgan Stanley headquarters are seen on June 9, 2009 in New York City.  Morgan Stanley is one of ten lenders to gain approval from the United States Treasury to repay $ 68 billion in Distressed Asset Relief Program (TARP) funds.  (Photo by Mario Tama / Getty Images)

NEW YORK – JUNE 9: Morgan Stanley headquarters are seen on June 9, 2009 in New York City. (Photo by Mario Tama / Getty Images)

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UPDATED 4:10 PM PT – Sunday March 14, 2021

Investment bank Morgan Stanley warned that US inflation could spiral out of control due to Joe Biden’s economic policies.

A new report from Morgan Stanley found that US inflation is surpassing the Federal Reserve’s 2 percent target and could hit 2.5 percent by the end of this year. Bankers said a combination of ultra-low interest rates and a multi-billion dollar fiscal stimulus is creating excess monetary liquidity.

As a result, consumer prices are on the verge of rising, while asset values ​​are entering “bubble mode”, threatening a financial collapse. Economists said that all of this can lead to more poverty.

“I think the possibility of rates going up too fast if inflation gets too high and oil prices go up, that combination is generally not good for the stock market,” said Jim Lacamp, senior vice president at Morgan Stanley Wealth Management. “Some of the inflationary pressures are going to be real, rental prices are going up. Even used car prices, many of them measures of inflation. The contributions that we see in the IPC are starting to increase. “

Economists added that 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.

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