Name: Mapping Global Central Bank Paths
Uploaded: 2026-01-22T22:34:04+00:00
Duration: 756 s

Speakers

Michael Gapen — Chief US Economist at Morgan Stanley

Chetan Ahya — Chief Asia Economist, Morgan Stanley

Jens Eisenschmidt — Chief Europe Economist, Morgan Stanley

Summary

Morgan Stanley's global chief economist Seth Carpenter hosts chief regional economists Mike Gapen, Chetan Ahya, and Jens Eisenschmidt to map central bank paths in the US, Japan, and Europe. The US view is for above-trend growth and possible Fed cuts in H2 2026 if inflation cools after Q1 tariff pass-through. Japan remains a constructive macro story, but yen weakness risks forcing an earlier BOJ hike. Europe is seen as having more disinflation ahead, allowing ECB cuts to a 1.5% terminal rate.

US growth is forecast around 2.4% in 2026, with inflation expected to decelerate after Q1 tariff pass-through.
Fed may cut once or twice in H2 2026, though fiscal-driven demand is an upside risk.
Japan macro outlook is constructive on nominal GDP, real wages, and consumption.
Yen depreciation is pressuring the BOJ and raises the risk of an earlier-than-expected hike.
Euro area disinflation is expected to continue, helped by energy base effects and wage moderation.
ECB is expected to cut in June and September to a 1.5% terminal rate, out of consensus.

Ideas

Michael Gapen Chief US Economist at Morgan Stanley 1:54

Fed cuts likely in second half 2026

Baseline US growth is modestly above trend at around 2.4% for 2026. Tariff pass-through keeps inflation elevated through Q1, but after that inflation pressures should diminish. With growth strong enough and the labor market stabilized, the Fed can wait, then execute one or two rate cuts in H2 2026 to move policy closer to neutral. If disinflation does not continue, the Fed may not cut.

Chetan Ahya Chief Asia Economist, Morgan Stanley 5:23

Constructive on Japan macro outlook

Japan macro outlook is constructive. Nominal GDP growth should remain strong, and consumers should transition from supply-side inflation keeping real wage growth low to accelerating real wage growth that supports real consumption. Inflation should shift from supply-side/food/currency-driven to demand-side driven.

Chetan Ahya Chief Asia Economist, Morgan Stanley 6:23

Weak yen may force earlier BOJ hike

BOJ is expected to hike in January 2027, but there is risk it may hike earlier to manage excessive yen depreciation. Beyond a threshold, a weaker yen hurts households through imported inflation and can lift inflation expectations and wage demands, so the BOJ may need to act to prevent currency weakness from adding to inflation pressures.

Jens Eisenschmidt Chief Europe Economist, Morgan Stanley 10:14

ECB cuts to 1.5% terminal rate

Euro area headline inflation should fall below the ECB's target, helped by energy disinflation/base effects and services/wage disinflation, especially as German export-manufacturing weakness reduces wage gains. This should give the ECB enough evidence to cut in June and September to a terminal rate of 1.5%, which is out of consensus relative to the market.

This Morgan Stanley video, published January 22, 2026, features Michael Gapen, Chetan Ahya, Jens Eisenschmidt discussing TLT, EWJ, FXY, Euro area government bonds. 4 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Michael Gapen, Chetan Ahya, Jens Eisenschmidt · Tickers: TLT, EWJ, FXY, Euro area government bonds

Mapping Global Central Bank Paths

Summary

Ideas

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