Fifty-fifty! Big Morgan CEO: U.S. recession odds are rising Fed expected to accelerate action

By    14 Jun,2022

The likelihood of a U.S. recession is rising along with the ongoing tug-of-war between the Federal Reserve and inflation, but it is unlikely to be a severe recession, Morgan Stanley Chief Executive James Gorman said Monday.


Speaking at a financial conference, Gorman said, "It's clear that we're likely to go into a recession, and the odds are now 50 percent to 50 percent. That's higher than the 30 percent risk of recession I predicted earlier. But at this stage we are unlikely to be in a deep or prolonged recession."

"Inevitably, this inflation is not temporary, and the Fed is bound to act at a faster pace than they expect." He added.

His comments on Monday came as stocks were in freefall and markets were worried that the Fed would increase rate hikes to fight inflation.

Bank executives have recently warned about the economic situation as the Fed raises interest rates and removes its quantitative easing program. JPMorgan Chase CEO Jamie Dimon has previously said he expects a "hurricane" ahead due to central banks and the Russia-Ukraine conflict.

But Gorman said he believes the Fed will eventually have the ability to pull inflation down from its decades-long high. He said, "I don't think we're going to be in some kind of huge bind in the next few years, I think the Fed will eventually get inflation under control. You know it's going to be bumpy."