Morgan Stanley’s chief economists examine the varied responses of global central banks to noisy inflation data in their quarterly roundtable discussion.----- Transcript -----Seth Carpenter: Welcome to Thoughts on the Market. I'm Seth Carpenter, Morgan Stanley's global chief economist. We have a special two-part episode of the podcast where we'll cover Morgan Stanley's global economic outlook as we look into the third quarter of 2024.It's Friday, June 21st at 10am in New York.Jens Eisenschmidt: And 4pm in Frankfurt.Chetan Ahya: And 10pm in Hong Kong.Seth Carpenter: Alright, so a lot's happened since our last economics roundtable on this podcast back in March and since we published our mid-year outlook in May. My travels have taken me to many corners of the globe, including Tokyo, Sao Paulo, Sydney, Washington D. C., Chicago.Two themes have dominated every one of my meetings. Inflation in central banks on the one hand, and then on the other hand, elections.In the first part of this special episode, I wanted to discuss these key topics with the leaders of Morgan Stanley Economics in key regions. Ellen Zentner is our Chief US Economist, Jens Eisenschmidt is our Chief Europe Economist, and Chetan Ahya is our Chief Asia Economist.Ellen, I'm going to start with you. You've also been traveling. You were in London recently, for example. In your conversations with folks, what are you explaining to people? Where do things stand now for the Fed and inflation in the US?Ellen Zentner: Thanks, Seth. So, we told people that the inflation boost that we saw in the first quarter was really noise, not signal, and it would be temporary; and certainly, the past three months of data have supported that view. But the Fed got spooked by that re-acceleration in inflation, and it was quite volatile. And so, they did shift their dot plot from a median of three cuts to a median of just one cut this year. Now, we're not moved by the dot plot. And Chair Powell told everyone to take the projections with a grain of salt. And we still see three cuts starting in September.Jens Eisenschmidt: If you don't mind me jumping in here, on this side of the Atlantic, inflation has also been noisy and the key driver behind repricing in rate expectations. The ECB delivered its cut in June as expected, but it didn't commit to much more than that. And we had, in fact, anticipated that cautious outcome simply because we have seen surprises to the upside in the April, and in particular in the May numbers. And here, again, the upside surprise was all in services inflation.If you look at inflation and compare between the US experience and euro area experience, what stands out at that on both sides of the Atlantic, services inflation appears to be the sticky part. So, the upside surprises in May in particular probably have left the feeling in the governing council that the process -- by which they got more and more confidence in their ability to forecast inflation developments and hence put more weight on their forecast and on their medium-term projections – that confidence and that ability has suffered a slight setback. Which means there is more focus now for the next month on current inflation and how it basically compares to their forecast.So, by implication, we think upside surprises or continued upside surprises relative to the ECB's path, which coincides in the short term with our path, will be a problem; will mean that the September rate cut is put into question.For now, our baseline is a cut in September and another one in December. So, two more this year. And another four next year.Seth Carpenter: Okay, I get it. So, from my perspective, then, listening to you, Jens, listening to Ellen, we're in similar areas; the timing of it a little bit different with the upside surprise to inflation, but downward trend in inflation in both places. ECB already cutting once. Fed set to start cutting in September, so it feels similar.Chetan, the Bank of Japan is going in exactly the opp