Morgan Stanley forecasts no ECB rate cuts through 2026
Morgan Stanley expects the ECB to hold rates through 2026 due to Middle East inflation risks. Analysts warn energy prices could keep inflation above target.
Morgan Stanley has revised its projections for the European Central Bank (ECB), now forecasting that interest rates will remain unchanged through 2026. This shift in expectations is primarily driven by escalating geopolitical tensions in the Middle East, which have introduced significant inflationary risks to the euro area.
The brokerage had previously anticipated two rate cuts to occur in June and September of 2026. However, analysts now believe the central bank will delay these reductions until 2027. This adjustment follows a similar move by Bank of America Corporation, which retracted its forecast for 2026 rate cuts last month as economic conditions shifted.
