Morgan Stanley: Soaring energy prices hinder interest rate cuts, expect the European Central Bank to remain inactive this year
According to Jin10 data, Morgan Stanley became the latest Wall Street brokerage on Thursday to predict that the European Central Bank will keep interest rates unchanged until 2026, citing the potential inflation risks from the Middle East conflict. The brokerage had previously expected the ECB to cut rates twice in June and September, but now anticipates that these cuts will be postponed until 2027.
Last month, Bank of America Global Research canceled its forecast for rate cuts in 2026. Morgan Stanley analysts stated in a report: "Given the recent rise in energy prices, inflation in the Eurozone may rebound above the ECB's target level for the remainder of this year." The analysts added: "By 2027, inflation may fall below the target again, but this depends on the rapid normalization of the energy market."
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