Morgan Stanley Research: Key Forecasts: Next 12-Months Outlook: Our High-Conviction Calls

Research evidence excerpt

Morgan Stanley Research: Key Forecasts: Next 12-Months Outlook: Our High-Conviction Calls

Global Idea

August 3, 2026 08:39 PM GMTM

Morgan Stanley Research: Key Forecasts

Next 12-Months Outlook: Our High-Conviction Calls Next 12-Months Snapshot

The economic outlook remains constructive: In the US, our outlook for inflation remains constructive, and we expect the Fed to stay on In the US, we expect that the deceleration in inflation in the next several prints will support

hold for the remainder of this year. The three dissents in favor of a hike indicate that the policymakers will continue to assess the macro purchasing power and real consumption growth. Advance estimates for 2Q26 US GDP

cross-currents; however, the market reaction to the press conference implies that there is reconsideration of the Fed's reaction function indicate that domestic private demand is running at a solid 3.1%q/q saar, up from 2.2% in

by investors. In the euro area, 2Q26 growth was surprisingly robust; on the inflation side, while the transmission from energy prices into 1Q26. At a global level, the growth impulse is increasingly capex and manufacturing-led, with

core is not yet visible in the data, we see risks that core moves up in 3Q26. And so we expect that the ECB will hike at the September meeting.

Asia at the center. 2Q growth momentum in the region is holding up better than expected,

For the BoJ, we now expect that policy normalization via another policy rate hike will be earlier, in October instead of December. More broadly,

supported by AI demand and a broader capex cycle tied to energy security, defense spending,

global growth outlook remains in line with our mid-year outlook, with the capex cycle in the US and Asia supporting growth via domestic

demand and exports.