Morgan Stanley Adjusts ECB Rate Hike Expectations, Forecasts 50 Basis Points Increases in June and September

Gate News Report, March 23 — Morgan Stanley rate strategists Luca Salford and Maria Chiara Russo have revised their forecasts for the European Central Bank’s monetary policy in their latest report. The report notes that ongoing Middle East conflicts, limited visibility into the buffer zone, and preliminary analysis of the central bank’s stance in an environment of stagflation have prompted Morgan Stanley to adjust its ECB predictions. Currently, Morgan Stanley expects the ECB to raise interest rates by 50 basis points in June and September 2026, reversing previous expectations of rate hikes in 2027. In comparison, LSEG data shows that financial markets currently anticipate three rate hikes by the ECB this year. Additionally, these strategists forecast that under their baseline scenario for the ECB’s interest rate path, the 10-year German government bond yield will be 2.80% at the end of 2026 and 2.70% in 2027.

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