With new GDP data from the Bureau of Economic Analysis and the quarterly Personal Consumption Expenditures (PCE) print signaling economic growth, many investors are hoping this will fuel the Federal Reserve to lower interest rates sooner rather than later.

Morgan Stanley Chief Global Economist Seth B. Carpenter joins Yahoo Finance to discuss Morgan Stanley's (MS) views on how and when the central bank will choose to cut rates while attempting to curb inflation, as well as giving insight into the global economy.

"If you look at the decade before COVID, the US, Europe, the developed market economies were sort of mired in this low-interest rate, low inflation world," Carpenter explains. "I think that sort of truly muddling world is probably over. The central banks are going to get back to their inflation target. I think it was remarkable that just three or four years ago their biggest concern was that inflation was too low, now it's too high, but it'll come back, but it won't go back to those lows they are worried about. I think that's true in the US".

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- As you wrote in this outlook, there's still a long road ahead when it comes to inflation coming back to normal, whatever normal means. I guess are we talking 2% sort of globally.

- Absolutely. I mean, I personally take Jay Powell at his word that they are committed to their 2% inflation target. They also have that new framework where there may be during an expansion a little bit above two so 2/1. But we don't think we're in a new world where inflation is 3% or 4% forever.

It's coming down. We think it probably gets to inflation in the US core inflation 2/4 at the end of next year and 2/1 at the end of '25. So really pretty good progress towards their target.

- But it is going to take a while. And that's true not just for the US, but globally as well for inflation to come back down to a more normal level and for rates to come back down to a more normal level from start to finish I guess.

- I think no question there. And I have to say one thing that is just different. If you look at the decade before COVID, the US, Europe, the developed market economies were sort of mired in this low interest rate, low inflation world.

I think that sort of truly sort of muddling world is probably over where the central banks are going to get back to their inflation target. I mean, I think it was remarkable that just three or four years ago, their biggest concern was that inflation was too low.

Now it's too high. But it'll come back. But it won't go back to those lows that they worried about.

I think that's true in the US. I think that's true in the euro area. I think perhaps the untold story so far, though, that I think lots of investors need to pay a lot more attention to is Japan.

Over two decades, really boring, really mired in sort of 0 nominal growth. Those days are behind us. We think there is a fundamental structural shift there in Japan.

Inflation has got up some of it imported-- some of it imported from commodities. So that part is not sustainable. But there is a real change in the underlying dynamic of inflation in Japan. You

Can see it in the wage negotiations. You can see it in what's going on with producer prices. We think Japan really has turned the corner and has closed the door on those sort of lost decades of no growth.